The Business Owner's Roadmap to Succession Planning
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The Business Owner's Roadmap to Succession Planning
- 1. THE BUSINESS OWNER’S ROADMAP TO SUCCESSION PLANNING THE BUSINESS OWNER’S ROADMAP TO SUCCESSION PLANNING
- 2. Windows Mac Tablet • Attendees are in listen-only mode • This webinar is being recorded for future on-demand playback • Your participation represents acknowledgement that we are recording • Tweet questions & comments to @WelchLLP GROUND RULES
- 3. Zoran Vranjkovic, CPA, CA, CFP, TEP Partner Welch LLP zvranjkovic@welchllp.com Candace Enman President WelchGroup Consulting cenman@w-group.com Jon Blair, CPA, CA Manager, Finance and Business Administration A.L. Blair Construction Group jonblair@alblairconstruction.com Erin Binks Managing Director Family Enterprise Xchange Ottawa ottawa@family-enterprise-xchange.com PRESENTERS FEATURING SPECIAL GUESTS
- 4. • The reluctance to plan your exit • The importance of succession planning • The succession planning roadmap • Planning process • Estate planning • Transition plans
- 5. THE RELUCTANCE TO PLAN YOUR EXIT
- 6. POLL: Do you have a succession plan in place? A.Yes, it’s well documented B.Yes, but it’s informal C. No D.Not even thinking about it
- 7. THE IMPORTANCE OF SUCCESSION PLANNING Create exit options for owner Stability of the business Knowledge transfer Minimize conflict
- 8. SUCCESSION PLANNING ROADMAP Goals/ Vision Needs Analysis Owner’s Options Estate & Tax Planning Transition Plan Wealth Management Plan
- 9. Goals & Vision Needs Analysis Owner’s Options PLANNING
- 10. ESTATE & TAX PLANNING PLANNING FOR INCAPACITY, DEATH, MINIMIZATION OF TAXES AND PEACE OF MIND
- 11. TRANSITION PLAN Document your plan Create clear and defined roles & responsibilities Discuss corporate governance Establish transition timelines
- 12. • Create a legacy • Business continuity • Maximize your value • Minimize conflict SO WHAT?
- 13. Windows Mac Tablet TWEET QUESTIONS AND COMMENTS TO @WELCHLLP QUESTIONS
- 14. Zoran Vranjkovic, CPA, CA, CFP, TEP Partner Welch LLP zvranjkovic@welchllp.com Candace Enman President WelchGroup Consulting cenman@w-group.com Jon Blair, CPA, CA Manager, Finance and Business Administration A.L. Blair Construction Group jonblair@alblairconstruction.com Erin Binks Managing Director Family Enterprise Xchange Ottawa ottawa@family-enterprise-xchange.com QUESTIONS FEATURING SPECIAL GUESTS
Editor's Notes
- Candace Enman Candace is the President of WelchGroup Consulting, a boutique advisory, Contract CFO and Mergers & Acquisitions practice. Passionate about transformational change, Candace works to position entrepreneurial companies for sustainable growth and/or successful exits. Zoran Vranjkovic Zoran is a tax specialist, with a focus on providing tax and estate planning to business owners, high net worth individuals, and their families. His expertise includes trust and estate planning, implementing tax minimization strategies, corporate reorganizations, and structuring purchase and sale transactions. Erin Binks Erin Binks is the Managing Director for FEX Ottawa. Having worked 10 years in her own family insurance business as a fourth generation, Erin understands the value that FEX can provide to business families. When she is not baking with her two young children, Erin is also managing the Ottawa Bach Choir. Jon Blair Jon is the Manager of Finance and Business Administration at A.L. Blair Construction. In his role, he focuses on asset management, pricing of materials, as well as compliance. He also works on numerous special projects such as business valuations.
- The goal today is to gain some insights on the importance of succession planning and to have a conversation that particularly looks at what we believe to be the critical pit stops owners shouldn’t miss on this journey as well as some the roadblocks owners may encounter and how they can move past them.
- Business transition planning ensures that you as the owner of your company can pass on its ownership and management in a way that ensures effective new leadership and continued business growth. Succession is the act of grooming a successor to take over your role as that leader of your company. It can mean passing the baton to the next generation, selling the company to your management team or preparing your business for an external sale. Given that Owners spend their whole lives creating, building and fostering this growth in their business, it’s surprising that statistics show that most business owners don’t have a formal succession plan in place. Last year’s OBJ survey showed that 76% don’t have a formal written plan in place. This is really the first roadblock owners encounter, and that is simply the reluctance to plan their exit. Panel Discussion: So Why don’t owners plan their exits? *** share stories, examples Never going to retire Question mortality Don’t know where to start Don’t think the company is saleable Difficulty identifying a successor Business is their identity Unrealistic timelines Discuss Family business vs. Business family and identifying as a family business.
- Poll will pop up in another window- this slide will not be shown Discuss that in the 2016 Ottawa Business Growth Survey, the results were shocking. 14% yes, it is well documents 41% yes, but it’s informal 25% No 20% Not even thinking about it
- With so many owners not having a formal exit strategy in place, we need to re-educate the market of it’s importance. Panel Discussion: Why should Owners have a Documented Succession Plan in Place? *** share stories, successes/failures, examples Exit options Look critically at the business and assess what you are transferring and how you want to transfer it Valuation options Knowledge Transfer Business is worth nothing if it’s all on you, or in your head Build team, future leaders, empower & growth of employees Stability of the business Business continuity Company not reliant on you Business strategy may not be aligned between generations No back up plans Uncertainty with key employees Minimize conflict Continuity of business Employees/family know the plan and their roles Family harmony/Family dynamics Written plan Clear roles & responsibilities Communication Interaction with non-familial employees
- I think we’ve established that planning is key to a successful transition whether that be to family or an external party: This roadmap shows 6 essential steps that need to be considered. Goals/Vision: What is it that you want for yourself & your business? Active in the business (time & level of effort), appetite for risks, do you need liquidity and how fast? How much do you need to maintain your current lifestyle? Needs Analysis: Who is the likely successor? Do they have the skills, is the person already in the company, is the management group capable (family and non)? Value of the business? (likely the hardest step) Owner’s Options: Family, MBO, Sell Externally; who do you want to sell it to; do they have the financial means? Leveraged buy-out (debt & equity); skin in the game Estate planning: how to structure your affairs, minimize taxes, do you have wills, shareholder agreements, insurance, how will you divide your assets…notion of fair vs equitable Transition plan: ensure you have a documented plan. Everyone understand their roles & responsibilities, transition timelines, expectations, accountability, documented processes, etc. Wealth mngt plan: how will you invest, protect your assets
- When it comes to your exit strategy, one of the most important things you can do is plan. Yet we know that many don’t. We often hear the CAFÉ/Family Enterprise Exchange stats that over 75% of businesses fail when they transition…I’m curious why is that from a planning level? Erin What are some of the key concerns you see with your membership base? Talent pool (how to address that…education, other jobs) Identify the best person for the job… Leaving the conversation too late Family dynamics John I’m interested in learning how you got involved in the family business, and if there was ever a specific conversation about expectations of working in the family business? As well, would you mind sharing what have been some of the successful planning initiatives that have been done or areas that continue to be a work in progress? Formal plan? Any skill set lacking? Any knowledge gaps? CA/CPA designation, was this encouraged by the family to seek other employment before joining the company? How have the owners empowered the next generation? How do you gain respect of people who have been there longer than you?
- Jim, this one is specifically for you but the others can chime in as well: As the owner of a business, what are the key estate & tax planning opportunities that should be aware of? Estate planning Financial plan Wills Insurance Minimize taxes Tax Planning Sale of shares – capital gains exemption or defer paying tax Need to structure your company properly before transferring ownership – maximize wealth Net amount they take away Importance of shareholder’s agreement Will up to date Tax upon death you’ll need to pay Insurance How to extract non-essential assets from the business
- Most owners say they have a succession plan in place, but it’s all in their heads. If it’s in your head, it’s not a plan, it’s an idea. A lot of owners get caught up in the notion that it needs to be extremely formal, but it can be something very simple, it just needs to be clear. Ensure your plan is documented and it’s known by all parties. Something they can refer back to. Clear and defined roles & responsibilities. Understood expectations, accountability. Corporate governance – how decisions will be made. What are the transition timelines. Documented processes and plans. Wealth Management Plan – to be discussed at another time
- Reiterate that as an Owner you’ve likely spent a significant amount of time and effort, creating, building and fostering growth in your business. It needs to be documented! But it’s equally as important to put the time & effort into planning for it’s transition. Create a legacy Ensure the company’s continuity….take care of your employees Maximize your value Mitigate conflict in the family
- Seed questions: How often should I review my succession plan? - - -