No. 4: Getting Started on Your Plan

If you’ve read through the fifty lessons in Building With The End In Mind, you know there is a lot to think about. So where do you start in terms of moving the process forward?

Step one of this process is to obtain some experienced advice and that’s me. That is why I offer to answer your questions and to schedule a free consultation to just talk and think. We can start via email if you prefer.

When we talk, or converse on-line, I’ll ask you about your basic financial data such as gross annual revenue, overhead, profitability, size and location of your operation (even if you’re a force of one!). Of course, I’m going to ask “How do you see your story ending?! We’ll go over important but basic information and you’re free to guess or round off the numbers. This is big picture stuff. I’ll need to know what you’ve done so far, if anything, on the succession planning front, and what you may be thinking. I’ll need to know on a headcount basis who else is on your team, licensing or regulatory requirements in your professional services venue, what tax returns are being filed every year, among other things. 

My point in asking these questions is not to talk you into setting up a Succession Plan – I will not do that. Sometimes the best advice I give a new prospect is, “Don’t do it. It doesn’t make sense.” I’ll always tell you what I think and why, and then hopefully point you down a better path that has worked for others who are similarly situated.

But if you are one of those who perhaps should explore the Succession Planning process in greater detail, I offer my services on a flat-fee engagement and this is where we really get into the details. I’ll need to study your financial statements, entity structure or sole proprietorship, employment agreements, figure out growth rates, review any business valuations, understand your compensation method or preferences, and more. I usually schedule a series of 90-minute calls during which we’ll roll up our sleeves and get to work. This process usually takes about four to six hours up front, and then another three to five hours as the plan comes together and your other successor team members start to get more involved. I’ll stay with you during the entire process if you need me, and I’ll even talk to your G2(s) if you’d like.

Most conversations initially include only the G1 owner or owners, even if this is a family business. We can bring in the next generation owner prospects after a call or two, but I’ve found that there are a lot of options and concerns that are best aired in a small room, and the same is true when I speak to the next generation owners. There will come a time for the entire group to sit down and work together on the details, but figuring out everyone’s hopes and fears, sharing financial needs and issues, and even spouses’ concerns, is hard work many times and it is even harder with too many people listening in.

I do not do the spreadsheet work but I can tell you what to do if you want to try it on your own. I’m working to put together a short list of qualified analysts to assist, as well as business appraisers, even attorneys so I can point you in the right direction as you proceed. It is customary that I speak to your accountant or CPA to make sure the entity structure is correct for you on a tax front as well as the Succession Planning front but this call happens further down the road. If you follow the advice in my book, the lawyers come last and, by that time, the plan details should be fairly clear for the documentation process. I don’t usually read your legal documentation as I’m too old and rusty to offer much input (and I dropped my bar ticket when I turned 65). And reading legal documents just isn’t how I want to spend my retirement years!

The goal of all this work is not to deliver to you a signed, sealed, guaranteed pathway into the future and beyond – the goal is to execute T1, or Tranche One, and see how that goes. In two or three years, the handwriting will be on the wall as they say. You will know. And so will your next generation owners.

Thanks for reading,

David Sr.