A financial advisory firm approached us about becoming referral partners and ended up hiring us to work with their team. They are fantastic folks who have become good friends.
They do a beautiful job of helping families and businesses transition to a more prosperous and healthy financial future. Their very comprehensive process not only helps with the management of financial assets but relational, legacy, and physical assets as well. The “physical asset” part is where they wanted to engage our team.
Much of the wealth of the “greatest generation” was created through some sort of enterprise. Most wealthy families have a business behind them. The last estimates I heard mentioned 12 million of those businesses in the U.S. needing to transition in the next 10 years.
12 million in the next 10 years!
When it comes to transitioning a family business (which many of those businesses are), there are really only three options:
- Transition it to the next generation of the family.
- Transition it to a leadership team for an owner to oversee.
- Sell it outright.
Most of us are pretty aware of the precarious nature of option 1 (failing 60% of the time in the second generation, 90% in the third). And the second option, given that most of the skills required for an entrepreneurial launch are the opposite of team leadership and management, doesn’t often fare any better.
Option 3 often feels like the only option for business owners but usually results in a sale price less than an owner believes their life work should have garnered. Given the state of the next generation of many families and the lack of a mature leadership team executing on a clear path to a better future, option 3 often becomes the defaulted, only option. We often encounter business owners wrestling with which path to pursue. We tell them all the same thing:
Working on the right things will be incredibly beneficial whether you decide to sell, transition to a leadership team, or pass it on to the next generation of your family.
Our friends at the financial advisory firm helped us connect some powerful dots. If you build a strong leadership team with clear roles and responsibilities, get clear on who you are as a company, craft a powerful vision for the future, and start executing on a clear strategic plan to get you there:
- The next generation’s probability of success will increase dramatically.
- Your leadership team will be more successful and require less of you.
- Your sales price will likely increase significantly.
We have also found that some business owners who think they would just like to be done with their business and get it sold, actually change their minds once their companies start to get really clear, successful, and require less of them. Increasingly, the biggest challenge I am facing with many of the leaders we work with is how to deal with the guilt they feel about not working so much.
Now that is a problem I wish more leaders had!
- Are you clear on whether or not you want to transition your business or sell it outright?
- Do you have a clear leadership team in place, an articulated culture, a clear picture of the future, and a well-defined plan to get you there?
- Are you enjoying the kind of margin in time and money you thought you would be at this point in your career?