DON’T TALK ABOUT SUCCESSION
Discover the Bigger Future Instead
Ownership
Family/
Personal
Business
© The BDO SuccessCare Program™
THE IMPENDING CRISIS
• 3 of every 4 business owners will reach retirement age in the next
1 to 2 car leases
• Less than 50% have a succession plan
• Around 80% would prefer to pass the business to family members
• But only 30% successfully transition through the second generation
• Less than 10% survive the third generation
© The BDO SuccessCare Program™
2
MEET THOM PENMAEN
I have a vision
for the future
It feels great
But it’s not
likely to happen
There’s too
many obstacles
Thom doesn’t have confidence that
the obstacles can be overcome
© The BDO SuccessCare Program™
3
THOM IS HEADED FOR AN INVOLUNTARY SALE
One Day He Will Sell
• Death / ill health
• Bankruptcy
• Franchisor
Inside the
family / business
• Lifestyle changes
Involuntarily
Voluntarily
Outside the
family / business
He Needs to Be More Proactive and Create a Choice
© The BDO SuccessCare Program™
4
CONSIDER THOM’S FEARS
Fear of losing wealth
•
What if something goes wrong and
we lose all we’ve worked so hard
for?
•
We need to protect our retirement
•
The kids have different ideas of
what’s a necessity and will waste
the profits
© The BDO SuccessCare Program™
5
CONSIDER THOM’S FEARS
Fear of losing control
•
This is my business; I built it
•
This business is my life; I won’t be
pushed out!
•
No one can run it as well as I can
•
Every time I even go on vacation,
something goes wrong
© The BDO SuccessCare Program™
6
CONSIDER THOM’S FEARS
Fear of conflict
•
My son and I don’t see eye to eye
•
How can I choose one child over
another?
•
My kids will never be able to work
together
•
I don’t want to cause family fights
© The BDO SuccessCare Program™
7
DON’T PLAN FOR SUCCESSION
•
Succession is negative
•
Succession implies retirement
•
Retirement means to take something
out of use
© The BDO SuccessCare Program™
8
PLAN FOR THE BIGGER FUTURE INSTEAD
•
Transition is positive
•
Transition focuses on the bigger future
•
What can you gain by engaging others?
© The BDO SuccessCare Program™
9
THE LINE OF CONFIDENCETM
Fear
Uncertainty
Procrastination
Inertia
Living in the
unknown
Information
© The BDO SuccessCare Program™
10
The Communication Phase
Line of Confidence
The Learning Phase
Implementation
The Bigger
Future
Initiation
Direction
Capability
Choice
LEARN ABOUT THE FAMILY BUSINESS HIGHWAY
© The BDO SuccessCare Program™
11
UNDERSTAND DIFFERING OBJECTIVES
The 3-Circle Model
Wealth Centre
• Stewardship
• Fair and Equitable
Emotional Centre
• Empathy
• Support
Wealth Engine
• Opportunity
• Competition
Image adapted from the 3-circle model by Tagiuri & Davis
© The BDO SuccessCare Program™
12
UNDERSTAND DIFFERING EXPECTATIONS
Sophie
63
Thom
65
Carl
44
Neil
24
Cathy
40
Tami
14
© The BDO SuccessCare Program™
13
Brian
36
Diane
36
Rachel
5
Gareth
1
Derek
30
UNDERSTAND DIFFERING EXPECTATIONS
Veteran (1925 – 1945)
The Radio Age
Baby Boomer (1946 – 1964)
The TV Age
© The BDO SuccessCare Program™
14
Gen X (1965 – 1980)
The Computer Age
Gen Y (1981 – 1999)
The Digital Age
LEARN HOW TO TRANSITION ALL THE CAPITAL
Principles and Values
Enable the continued
Individual/Family
Reputation
supportRelationships
of individuals,
Personal
Family
the Traditions
family unit and
Philanthropy
the greater community
Environment
Physical Provide
Shares
for the financial
Cash
independence and
Property
lifestyle of retiring
Equipment
and future generations
Vehicles
Social
Education
Enhance
the success of
Competencies
the individual
and the
Product
Knowledge
Experience
and Wisdom
profitability
of
Business
theRelationships
business
Business Reputation
© The BDO SuccessCare Program™
15
Intellectual
ENGAGE IN THE SUCCESSPROCESSTM
A
B
D
C
© The BDO SuccessCare Program™
16
A. CLARIFY THE BIGGER FUTURE
© The BDO SuccessCare Program™
17
IS THERE A COMMON INTEREST?
Strategies to cross
the hurdles
Hurdles and Threats
1
1
2
2
3
3
4
4
5
5
6
How will
it feel to have
built it?
6
7
8
What does your
house look?
9
10
Strategies to cross
the hurdles
1
2
3
4
5
6
© Copyright 2005
© The BDO SuccessCare Program™
18
B. UNCOVER THE ROADBLOCKS
Hurdles and Threats
1
How will
it feel to have
built it?
2
3
4
5
6
7
What does your
house look like?
8
9
10
Strategies to cross
the hurdles
1
2
3
4
5
6
© Copyright 2005
© The BDO SuccessCare Program™
19
THE DISCOVERY QUESTIONNAIRE
Where Are You Today?
Each family member answers
40 questions to provide their
opinions around 13 important
areas of their business
© The BDO SuccessCare Program™
20
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Business Planning
Business Values
Communications
Compensation Plans
Connectedness
Contingency Planning
Decision Making
Estate Planning
Future Uncertainty
Guiding Principles
Harmony
Ownership
Succession Planning
SAMPLE INDIVIDUAL RESPONSES
Areas of Concern
© The BDO SuccessCare Program™
21
Building Blocks
COMPARISON BY CATEGORY
Comparison Category
Member
Member
Member
Member
Member
Member
Member
Member
Business Planning
Business Values
Communications
1
2
3
4
5
6
7
8
Compensation Plans
Connectedness
Contingency Planning
Decision-Making
Estate Planning
Future Uncertainty
Guiding Principles
Harmony
Ownership
Succession Planning
-10
© The BDO SuccessCare Program™
22
-8
-6
-4
-2
0
2
4
6
8
10
UNCOVERED THE ROADBLOCKS
1. Lack of knowledge around how people enter and exit
ownership
2. Uncertainty around future direction of business / lack
of direction and process
3. No clarity around roles and responsibilities
4. Conflict arising from poor communication
5. No process to determine compensation
6. Lack of input into major decisions / No decisionmaking or redress process
7. No identified successor
© The BDO SuccessCare Program™
23
C. IDENTIFY CRITICAL SUCCESS FACTORS
Hurdles and Threats
1
How will
it feel to have
built it?
2
3
4
5
6
7
8
What does your
house look like?
9
10
Strategies to cross
the hurdles
1
2
3
4
5
6
© Copyright 2005
© The BDO SuccessCare Program™
24
STRATEGIES THAT ADDRESS THOM’S FEARS
1. Fear of losing wealth
•
Develop a wealth plan with wills,
shareholder agreement, insurance
•
Build up wealth independent of the
business
•
Identify the right strategic direction
and monitor with regular SWOTs
•
Train and develop a strong
management team
•
Establish an advisory board
© The BDO SuccessCare Program™
25
STRATEGIES THAT ADDRESS THOM’S FEARS
2. Fear of losing control
•
Protect legal control with an estate
plan
•
Ensure there is more than one
individual trained on each role
•
Establish a structured decisionmaking process with clear authority,
responsibility and accountability
•
Focus on your core strengths and
delegate non-energizing tasks
© The BDO SuccessCare Program™
26
STRATEGIES THAT ADDRESS THOM’S FEARS
3. Fear of conflict
•
Develop policies through a Family
Charter and Participation Plan
•
Create a “we focus” to build
stewardship and transition values
•
Establish a forum for open,
participative communication
•
Create a principles-based
Shareholder Agreement
© The BDO SuccessCare Program™
27
80% – 90 % IS COMMUNICATION
The BDO Business Transition Program enables
communication in all three circles . . .
The Communication Vehicle
© The BDO SuccessCare Program™
28
THE BDO SUCCESSCARE® PROGRAM
The Strategic Ownership ProgramTM
The Legacy Builder ProgramTM
Direction and purpose for
the next 1000 months
Protecting and transitioning
the physical assets
The Business Enhancement ProgramTM
Building and maintaining
the wealth engine
Image adapted from the 3-circle model by Tagiuri & Davis
© The BDO SuccessCare Program™
29
THE BDO SUCCESSCARE® PROGRAM
The Strategic Ownership ProgramTM
The Legacy Builder ProgramTM
• Family Business Philosophy
• Communication Vehicle
• Lifestyle Plans
• Ownership Plan
• Wealth Plan
The Business Enhancement ProgramTM
• Value Enhancement Strategies
• Management Transition Plan
• Successor Development Plan
Image adapted from the 3-circle model by Tagiuri & Davis
© The BDO SuccessCare Program™
30
THE BDO INTEGRATED TRANSITION PLAN
Ownership Plan
Management Transition Plan
• Business Valuation
• Skills and Needs Assessment
• Structuring/Financing Plan
• Define Authority, Responsibility &
• Estate Plan/Contingency Plan
Accountability (ARAs)
• Governance/Decision-making • Management Advisory Board
• Shareholder Agreement
Wealth Plan
• Wealth Management Plan /
Investment Plan
• Insurance Plan
• Business Valuation
• Tax Management Strategies
Value Enhancement Strategies
• Strategic Business Plan
• Business Systems and Processes
• Restructuring & Financing Plan
• Business Valuation
• Contingency Plan
• Tax Management
Strategies
The SuccessCare®
The BDO
Integrated
Program
Transition Plan
Integrated transition
planning for
Forentrepreneurs
entrepreneurial
and
family
businesses
and
family
business
Successor Development Plan
• Career Development Plan
• Mentoring Plan
• Ownership and/or Management
Advisory Board
© The BDO SuccessCare Program™
31
Family Business Philosophy
• Family Charter
• Legacy Plan
Lifestyle Plans
• Personal Development Plans
• Post-Transition Plan
• Financial Plan
Communication Vehicle
• Family Participation Plan
• Family Council
• Owners’ Forum
• Transition Principles
• Advisory Boards
TO LEARN MORE…
•
Book a complimentary consultation review the
SuccessProcess
•
Ask us to conduct the Discovery Questionnaire for your
family or entrepreneurial business
•
Attend our group Changing Lanes Without a Major
Collision workshop to develop your roadmap together
© The BDO SuccessCare Program™
32
THE BDO SUCCESSCARE® PROGRAM
Helping You Build Your Bigger Future
Ownership
Contact:
Your Name
Your Number
Family/
Personal
Business
© The BDO SuccessCare Program™