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Family Business Succession Planning:  We are our own worst enemies
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Family Business Succession Planning: We are our own worst enemies

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Gifting the family business to the adult children is a recipe for wealth destruction. Learn 9 steps to help make the transition a success.

Gifting the family business to the adult children is a recipe for wealth destruction. Learn 9 steps to help make the transition a success.

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  • 1. Copyright Jeff Haltrecht | family business advisor 2011Family Business Succession Planning:We are our own worst enemies
  • 2. Every Business Must Be SoldEither Internally Or Externally ‣ Gifting the business to your children is a Copyright Jeff Haltrecht | family business advisor 2011 recipe for wealth destruction 2
  • 3. How OldAre Old People? ‣ Old is someone 15 years your senior ‣ No matter your age, you still feel young... Copyright Jeff Haltrecht | family business advisor 2011 ‣ And your not ready to ‘stop doing’! 3
  • 4. Could We Say The SameFor Succession Planning? ‣ “Succession planning? That is something I will think about when I get older.” ‣ Still lots of time Copyright Jeff Haltrecht | family business advisor 2011 ‣ My kids aren’t ready yet ‣ Going to work until I die 4
  • 5. Some Of UsMay Be Thinking... ‣ “What would I do with my time if I wasn’t building this company?” Copyright Jeff Haltrecht | family business advisor 2011 ‣ “Will my children do the work the way I do the work?” 5
  • 6. 30%6Copyright Jeff Haltrecht | family business advisor 2011
  • 7. Why Do Only 30% Of Family BusinessSucceed At The Second Generation? ‣ Poor training ‣ Lack of common vision ‣ Parent does not hand over de-facto control Copyright Jeff Haltrecht | family business advisor 2011 ‣ Compensation program ‣ Business is gifted vs. earned 7
  • 8. Are We AvoidingThe Difficult Questions? ‣ Taking the time to plan the transition means having the difficult conversations: ‣ Who will lead? Copyright Jeff Haltrecht | family business advisor 2011 ‣ When will it happen? ‣ How to compensate? ‣ What gets transitioned? ‣ Who has defacto control? 8
  • 9. Would You GiftThe Stock Portfolio? ‣ Look at the business as a wealth building investment that Copyright Jeff Haltrecht | family business advisor 2011 provides an ROI... ‣ If this was the view, would you gift it? 9
  • 10. You Have A Choice:Voluntary Or Involuntary Transition ‣ Our role is to replace Choice! ourself at the point we stop adding value to Transition or Sell the organization Copyright Jeff Haltrecht | family business advisor 2011 ‣ Think of yourself as the business’ steward, instead of its founder 10
  • 11. Family Business Succession PlanningIn 9 Successful Steps 1 Separate 2 Begin with 3 Identify the people from end in mind obstacles problems 6 Determine roles, 5 Rebuild 4 Craft strategies accountability, structure on to overcome Copyright Jeff Haltrecht | family business advisor 2011 responsibility paper obstacles 7 Compensate 8 Transition over 9 Three tools family at market 3 to 7 years every family value deploys 11
  • 12. Separate The People StepFrom The Problem 1 Emotional Centre •Empathy •Support Wealth Centre Ownership Family •Stewardship •Fair and Equitable Copyright Jeff Haltrecht | family business advisor 2011 Management Wealth Engine •Opportunity •Competition Source: The SuccessCare Program 12
  • 13. Begin With StepThe End In Mind 2 ‣ What will the business look like in 7 years? ‣ customers Copyright Jeff Haltrecht | family business advisor 2011 ‣ markets ‣ productsSource: The Success Care Program ‣ size ‣ structure ‣ people 13
  • 14. Identify StepThe Obstacles 3 ‣ What are the obstacles preventing the business from achieving the vision? ‣ Leadership skills? Copyright Jeff Haltrecht | family business advisor 2011 ‣ Resources (time, people, capital)? ‣ Productivity? ‣ Ownership structure? ‣ Output capacity? 14
  • 15. Craft The Strategies That Will StepOvercome The Obstacles 4 ‣ What are the 4 to 6 initiatives required to move things forward? Copyright Jeff Haltrecht | family business advisor 2011 15
  • 16. Rebuild The Preferred StepStructure On Paper 5 ‣ How does both the ownership and management structures need to evolve? Copyright Jeff Haltrecht | family business advisor 2011 16
  • 17. Determining Roles, Step 6Accountability And Responsibility Dad/ Mom ‣ Put people in roles that allow them to play to their Mary strengths, while developing future leaders Ken ‣ Give them freedom within Copyright Jeff Haltrecht | family business advisor 2011 a framework ‣ Reward their efforts 17
  • 18. Compensate Family Members StepAt Market Value For Their Work 7 ‣ Give them the opportunity to buy into the company over time using their own earnings Copyright Jeff Haltrecht | family business advisor 2011 ‣ Provide a bonus for delivering at the high end of their target 18
  • 19. To Fully Transition A Business, StepPlan On 3 To 7 Years 8 Cold Turkey Slow And Painful Management by successor Management Management by founder by successor Management by founder On again, off again Interim Solution Management by successor Copyright Jeff Haltrecht | family business advisor 2011 Management by non-family CEO Management by founder Progressive Management by successor Management by founder Source: The SuccessCare Program 19
  • 20. 3 Tools Every Family StepShould Deploy 9 ‣ Owner’s Council ‣ Family Charter ‣ Family Foundation Copyright Jeff Haltrecht | family business advisor 2011 20
  • 21. Will They Do The WorkThe Way You Do The Work? ‣ No ‣ But make no mistake: they will work as hard. Copyright Jeff Haltrecht | family business advisor 2011 ‣ Just in a different way that plays to their strengths and vision 21
  • 22. What AboutDe-facto Control? ‣ Yes, you must give this up too! Copyright Jeff Haltrecht | family business advisor 2011 ‣ Let them lead 22
  • 23. Gifting The Business To Your ChildrenIs A Recipe For Wealth Destruction ‣ Give your adult child a large enough sum of money and ask them where they would invest it. ‣ If they say ‘in the business’, you know an internal transition is possible Copyright Jeff Haltrecht | family business advisor 2011 ‣ If they say ‘no thanks’, sell the business outside 23
  • 24. Monetize The Value Created,While Shaping New Realities Starting fresh never felt so Copyright Jeff Haltrecht | family business advisor 2011 good! 24
  • 25. Lead With Your Entrepreneurial SpiritWhile Accessing Breakthrough Solutions theA bout r! a utho ‣ I believe being a trusted advisor involves listening first.  The more I seek to understand your business and what you are dealing with, the richer the dialogue becomes.  I have a friendly and engaging work style that is balanced between asking questions, challenging, and Copyright Jeff Haltrecht | family business advisor 2011 providing solutions for you to consider. ‣ What I don’t do is make decisions for you.  Our conversations are designed to stretch your thinking, for me to be a sounding board, and most importantly, a Jeff Haltrecht | family business advisor catalyst for you and your company’s growth. 25
  • 26. Treating You With Respect,While Challenging For Better Performance the A bout r! o auth Strategic Thinking ‣ When applied correctly, values guide behaviour Dev and set the tone for interaction between Lea opment Mod ness eling people.  Here is what you can expect when we el ders work together: i Exceptional Bus hip Experience ‣ Treating you with respect Copyright Jeff Haltrecht | family business advisor 2011 n M ar atio ke ‣ Challenging for better performance ov tin g Inn ‣ Helping you be internally driven Jeff Haltrecht | family business advisor ‣ Putting ideas to action ‣ Embracing change as the path to opportunity ‣ Communicating candidly ‣ Delivering results 26
  • 27. A Safe And Private PlaceTo Have A Proactive Discussion sPro duct ‣ Helping small to mid size business Strategic Business Plan owners maximize wealth within Build your business with powerful yet simple the company so that when you choose strategies that add to company wealth to sell or transition sometime in the Business Growth Advisor future, the business is valued at the highest Working one-on-one, we take a solid look at price possible. your strategic plan, leadership style, and Copyright Jeff Haltrecht | family business advisor 2011 management productivity, all with the intent of helping you maximize value within the company Succession Planning Effective solutions for realizing business wealth - so that the day you choose to transition or sell - the company gets the highest price possible 27
  • 28. Have A Terrific Day!Contact Information Building Company WealthTM ‣ WEB & BLOG ‣ TWITTER ‣ LINKEDIN Copyright Jeff Haltrecht | family business advisor 2011 ‣ EMAIL ‣ PHONE - 905.601.0311 ‣ OFFICE - Oakville, Ontario, Canada 28