Single Store Owner

OCT 2016

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Page 53 of 79

54 / Convenience Store News for the Single Store Owner / OCTOBER 2016 FROM THE EXPERTS Golden Goose or Black Swan? Why it's important to ask yourself if you have a transferable family business NO PLAN IS A PLAN Why are there family businesses that grow and thrive, while others risk continuing to the next generation or fail? In the book, "The Final Test of Greatness," the authors argue that "in a world of economic complexity, the failure to plan and manage succession is the greatest threat to the survival of the family business." Despite years of family business research, grappling with succes- sion continues to be an ongoing challenge for many owners. The studies paint a picture of contradictions be- tween the owner's wish to keep the business and the reality that they are not prepared for the challenge. Consider that: • 70 percent of businesses fail or are sold before they are passed to the next generation. • 84 percent want to keep the business and have a low mental readiness to exit. • 73 percent of owners do not have a formal suc- cession plan to deal with the most important fi- nancial decision of their life-preserving wealth. There are many reasons why formal succession planning is so important, including: 1. Ensuring the Business Is Transferable Don't assume the future will be a continua- tion of the past. A transferable business is a busi- ness that has preserved its value; can be owned and operated by someone else today or in the future; and is treated as an investment, not a job. Are you exploring the different scenarios and trends that are impacting your business and industry? Are you confident your business will be transferable today or in the future? 2. Lowering the Risk of Transfer Do you want to hold on to your business and risk the unexpected crisis of poor health, aging or the next recession? The longer you wait to implement a succession plan, the greater the risk. Businesses of any size can be disrupted by a voluntary event or, worse, an involuntary event such as death, divorce or lawsuits. These incidents could impact the value and economic viability of the company. A re you making decisions today that will increase the probability of having success in transferring your business and protecting your wealth? Why is this question important? It's because a majority of your wealth and largest asset is tied to an illiquid fam- ily business that is a source of income and a means for accumulating generational wealth. In the next 10 years, to optimize value for their families and continue the business for the next generation or new owners, millions of baby boomer-owned businesses are expected to change hands. Sadly, many of these owners are not as prepared for transferring their illiq- uid wealth as surveys tell us they believe they are. BY JAMES J. KIRLIN, PRIVATE CAPITAL SOLUTIONS GROUP

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