Many of our clients are entrepreneurs who have invested years of time, money, and sweat equity to bring a dream to life through an enterprise. This dream has supported their families, provided a valuable service, and may have offered value to investors either privately or through the public markets.
So when it comes time to think about retirement and what will happen to this wonderful dream they’ve nurtured over their lifetimes, small business owners face an important decision: ‘Who will take over after I retire?’
Many small business owners make this decision on their own, using their knowledge of their industry, their well-developed judgment, and their years of experience assessing employee aptitude and performance. Even so, they may or may not have all the information they need to make the best decision—either for the business or for their families.
There could be a child who has worked in the family business for a while, feels she has the drive and talent to take over the business, and simply not be considered because a less-passionate brother was automatically chosen as the successor.
Or perhaps none of the entrepreneur’s children have either the desire or the talent to take the reins. Thing is, we don’t know any of this unless we do a bit of family due diligence. Now, what exactly does that mean?
It means having the courage to have what some may consider being a difficult conversation. That’s usually the reason these conversations rarely happen. Most often, our fears are unfounded and once we begin the conversation, we end up with some pretty pleasant surprises. Either way, we have a much clearer idea about what the family wants and what the business needs. We also will be better equipped to choose a successor that will take the entrepreneur’s years of hard work and make even more out of them.
Unfortunately, too many advisors only look at the business side of things when working with entrepreneurs facing succession. Froehlich Financial Group prefers a more informative approach. This approach has two components: a) beginning to plan for succession years in advance and b) talking with your family and your other advisors along the way to get robust input on a variety of options.
This enables entrepreneurs to make fully informed decisions that preserve the value of their years of hard work, yield an optimal outcome for their families, and provide a smooth transition that gives investors confidence and preserves shareholder value. We think this approach makes more sense.
If you’d like a partner who can help you begin a more thoughtful succession planning process, call us. You can reach us via phone at 732-974-3770, or you can email me personally at firstname.lastname@example.org.
Image courtesy of Stuart Miles / FreeDigitalPhotos.net