{"id":1771,"date":"2012-10-02T06:06:57","date_gmt":"2012-10-02T06:06:57","guid":{"rendered":"http:\/\/www.shanecampbellcfo.com\/?p=288"},"modified":"2023-10-05T21:12:13","modified_gmt":"2023-10-05T21:12:13","slug":"succession-planning-for-dummies","status":"publish","type":"post","link":"https:\/\/www.b2bcfo.com\/shane-campbell\/succession-planning-for-dummies\/","title":{"rendered":"Succession Planning For Dummies"},"content":{"rendered":"

I am seeing a lot of succession planning experts in the news, seminars, blogs etc. these days.\u00a0 And rightfully so.\u00a0 As noted in my prior blog, somewhere between 8 and 10 million small U.S. businesses owned by baby-boomers will come to market over the next ten to fifteen years.<\/a> \u00a0These statistics suggest a looming and protracted buyer\u2019s market.\u00a0 So getting a fair value for your business will be a challenge, requiring advanced planning and considerable forethought.<\/p>\n

But so many business owners fantasize that they will avoid selling, and simply hand the keys over to their sons and daughters.\u00a0 As noted by my good friend David Ryan at DRJ Capital Advisors<\/a>, relatively few businesses are successfully transitioned to the next generation (less than one in three).\u00a0 Most of the time, the kids don\u2019t have the same passion and desire to run the business.\u00a0 They have their own lives, dreams and ambitions, which don\u2019t likely include your business. And even if they did want to run the business, they don\u2019t likely have the right skills and talents.\u00a0 Don\u2019t force this one.<\/p>\n

So what are the alternatives?\u00a0<\/p>\n

An outright sale is not out of the question \u2013 it just requires more planning and attention than in the past.\u00a0 Fix the business up with more curb appeal, starting now.\u00a0 If you have holes in the lineup or need some bench strength, hire up.\u00a0 If you have accounting or legal issues, resolve them.\u00a0 Maybe you have been letting the tail wag the dog by focusing too much on avoiding income taxes.\u00a0 Clean that up or it will cost you way more\u00a0money when you go to sell than the tax money you saved.<\/p>\n

How about an ESOP?\u00a0 Pain in the neck with all the compliance you say?\u00a0 Sure, but that\u2019s not sufficient reason to not to do an ESOP.\u00a0 You will get less for your business in an ESOP, but may end up netting more due to favorable tax advantages, especially if you own a C Corporation.\u00a0 The key here is \u2013 do you want to transition your business to some loyal, dedicated employees?\u00a0 If so, an ESOP is a great choice.<\/p>\n

The right transition of your business depends on the circumstances, so plan wisely.\u00a0 But don\u2019t wait – the more time you have to bring about the right transition, the better your chances of success.\u00a0 If you are like most small business owners, over 80% of your total net worth is tied up in the business.\u00a0 I don\u2019t care how diverse your investment portfolio is, you are not diversified so long as you own the business.\u00a0 Take some off the table.\u00a0 Bring in a partner, sell a portion to a private equity firm, or transition via an ESOP.\u00a0 But get moving…<\/p>\n","protected":false},"excerpt":{"rendered":"

I am seeing a lot of succession planning experts in the news, seminars, blogs etc. these days.\u00a0 And rightfully so.\u00a0 As noted in my prior blog, somewhere between 8 and 10 million small U.S. businesses owned by baby-boomers will come to market over the next ten to fifteen years. \u00a0These statistics suggest a looming and…<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","cybocfi_hide_featured_image":"","footnotes":""},"categories":[16],"tags":[19,18,35],"class_list":["post-1771","post","type-post","status-publish","format-standard","hentry","category-shanes-really-deep-insights","tag-exit-planning","tag-exit-strategy-2","tag-succession-planning"],"acf":[],"yoast_head":"\nSuccession Planning For 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