| For many people, succession planning consists | | | | plan include (and here we assume, like most |
| of placing personal property in joint | | | | small and emerging businesses that we have a |
| tenancy, executing a will, and buying some | | | | situation of family involved:What are the |
| life insurance. These measures taken by | | | | retirement goals of the current owners |
| themselves may not be very effective for the | | | | (timing and required financial |
| owner of a closely held business.Many | | | | compensation)?Which option makes sense: Sell |
| business owners are so focused on the daily | | | | to family, sell to an outsider or |
| operational concerns of running a business | | | | liquidate?What is a fair market value of the |
| they do not take the time to plan for the | | | | enterprise?What do I do about heirs that do |
| transition of their business assets. | | | | not or will not participate in the |
| Consequently, succession planning is not | | | | business?Does it make sense to designate |
| done, is put off until retirement is | | | | heirs a number of years ahead of the |
| imminent, or is rushed into in a | | | | transfer?If family members are buyers of |
| crisis.Waiting too long can be a serious | | | | preference, to what degree do they get a |
| problem for the company and/or intended | | | | "break" on buying the company?Have family |
| heirs. Options could be reduced or no longer | | | | members received appropriate and adequate |
| available because of bad timing. Failing to | | | | training in management to take over either as |
| provide for an orderly transition is one of | | | | managers or owners?How can a sale be |
| the top reasons for bankruptcy in small | | | | structured for minimum tax consequences?How |
| businesses that were, before an unplanned | | | | do I protect the Succession Plan in the event |
| ownership change forced the issue, | | | | of the untimely death of a key owner or a |
| operationally successful.There is no specific | | | | preferential heir?Engaging Your Professional |
| time in the history of a closely held company | | | | Resources:What is apparent from this list is |
| when succession planning should begin, but | | | | that succession planning is not a casual |
| the earlier the question is faced, the better | | | | exercise that is engaged in one year before |
| the result. In a family operation, the | | | | retirement. It requires the formation of a |
| Succession Plan can provide a firm foundation | | | | business "team" consisting of current |
| for orderly transition, provide confidence in | | | | owner(s), key family (particularly the likely |
| management and relieve owners of a potential | | | | heirs, if any), your tax accountant and your |
| burden.The worse strategy for succession | | | | corporate attorney, among others. If you have |
| planning is doing nothing at all. This is the | | | | a Board of Directors or Board of Advisors |
| best way to create havoc and often has been | | | | they should read on your succession plan |
| the demise of an otherwise healthy company. | | | | also. They can provide valuable independent |
| In the event of the death of the owner(s) | | | | experience on key questions that you may have |
| without a funded and protected succession | | | | in this area."Failing to Plan is Planning to |
| plan, chaos ensues, the government is often | | | | Fail." Effie JonesRobert A. Normand is |
| the heir of reality and family life is | | | | Executive Director of the Institute for Small |
| bitterly interrupted. Insurance helps but is | | | | Business Management ( and author of |
| certainly not the whole answer; planning for | | | | "Entreprenewal!, The Six Step Recovery |
| managerial succession is still a great | | | | Program for Small Business" ( Mr. Normand |
| question that must be addressed and | | | | has served as principal management consultant |
| answered.The Stages of Company Growth:The | | | | for more than 100 businesses ranging from |
| process of building a company proceeds as | | | | $500,000 to $50,000,000 in annual sales and |
| follows:1) Initial start-up period (also | | | | has owned and operated several small |
| called "Survival")2) Building Value Period3) | | | | businesses of his own in diverse industries. |
| Developing a Self-Sustaining Organization4) | | | | Mr. Normand's small business philosophy is |
| Providing for an Orderly Transition to New | | | | premised on the belief that small business |
| OwnersCertainly a Succession Plan needs to be | | | | management skills can be developed by busy |
| in place by Stage 4 and would be logical to | | | | entrepreneurs using readily available |
| have by Stage 3 (otherwise it can't be | | | | information, tools and procedures not found |
| "self-sustaining") but is definitely | | | | in business schools or formal degree |
| preferable to be in place during Stage 2.Key | | | | programs. He can be reached by telephone at |
| Succession Planning Questions:The major | | | | 941-330-0889 or by mail at 3751 Almeria |
| questions that must be faced in a succession | | | | Avenue, Suite A4, Sarasota, Florida 34239. |