Passing Down Your Success
By Tammy Buss
()
About this ebook
Are you unsure how to hand over control, or how to take it?
Passing Down Your Success reveals the
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Passing Down Your Success - Tammy Buss
Introduction
The only place success comes before work is in the dictionary.
—Vince Lombardi,
Hall of Fame American Football Coach
When I started out in business, I was young and like so many founders didn’t really know what I was doing. To me I was just making a living. I ended up growing a business and many years later had to plan for selling and/or transitioning out.
Even though my husband and I worked together, in separate sides of the business, I still didn’t think of it as a family business. Then it hit me when our son joined the business, after my husband retired. Holy crap, I actually have a family business. How do I transition this now? I realized it was easier said than done.
Passing down the business wasn’t just about me and my family. It concerned my clients and employees. They were like family, so I couldn’t simply sell and walk away. My business was built around relationships. We grew together over many years. How could I satisfy myself, my family, and my clients?
We had to figure out how the business was going to transition. We had to decide who was capable of being an owner to keep this business going beyond me. Could one of my sons do it? I have two sons who couldn’t be more different from each other. One works in the business; the other lives across the country and is in the Canadian Navy. I couldn’t imagine them working together. What about a spouse? A key employee? Oh boy, I needed to figure this out.
My life was simple, but what if there had been a second marriage? What if there were children from that marriage or stepchildren? All of a sudden, it could become complicated and overwhelming.
I had to figure out how to give one of my boys a share of the business yet make things equitable for the other. Or did I? I had to figure it out on my own, how to do everything. There were so many things I wish I had known. I wish I had started my planning earlier. I wish I had had a better system. I wish I had known who I could ask for help.
This book is my answer to those wishes, for you. Do the things I describe in this book now, so you don’t have to call for help later.
According to Stats Canada, as of December 2020 there are 1.22 million employer businesses in Canada¹. Of those, 97.9 percent (1.2 million) have fewer than one hundred employees.
Of those, 63 percent are family owned. Yet fewer than 34 percent of family small businesses have a documented, understood succession plan. Some may think they have a plan, but either it’s not documented or it’s not understood by everyone involved. I wish there were statistics for Have you even discussed it?
I can’t imagine how low that number would be.
Most first-generation family business owners are so busy running the business, and they face so many complexities and challenges when they think about succession planning, that they only start to deal with it when there is a conflict or a crisis. That’s when I get called. But it’s possible to deal with and prevent some of these conflicts and crises before they arise. Why not start now? It is never too early or too late—as Nike says, Just do it.
Most of the family business clients we work with at my firm, BlueRoots, have modest savings and retirement accounts. Maybe that sounds like you. If you built the business from the ground up, it’s likely that most of your wealth is in the business.
When you made money over the years, you invested it back into the business. Perhaps you started as a plumber. You worked for somebody before you set out on your own. You put all your money into trucks and equipment as you grew, and you hired people to help you as the business grew with your reputation. You did that for maybe twenty-five to thirty years, and over the last five or ten, as your reputation has grown, the money has really started coming in. You’re seeing a return on all that hard work and investment, and now you want to step back and enjoy it. But how? Have you even discussed it? Are your kids ready to take it over? Are they even interested? Are they capable? Are you ready to let go? Maybe you should just sell to one of your competitors—that would solve many problems.
Let’s say your kids want to get involved. Have you had a discussion around how to come into the business? Are they looking to buy in? Can they afford to buy it outright? Could they buy in at a level they can afford? Can you depend on them to run the business well, so it can afford to pay you regular dividends and pay them a salary? Can you even make that happen? Is it possible? Some days probably not. So many unanswered questions.
But it is possible. This book is not for people who intend to sell to a third party. If you are a first-generation founder and thinking about passing on your success while keeping the business in the family, this book is for you. If you are a second-generation family member starting to think about what will happen when your parents are no longer involved in the business, or how to get more involved, then this book is also for you. If you’re still not sure on what to do with your business when you exit, this book can help you as well.
What You’ll Find in This Book
We work with small, family-owned, first- and second-generation businesses. In every family, we see dynamics play out in three areas: the Business, the Owners, and the Family. These areas overlap, but they are not the same. Everything is tied together, but it can be teased apart. That teasing apart
is an important part of what we do, and we’ve used our approach to structure this book. You will see chapters on Business, Owners, and Family, and yes, they overlap, but they are distinctive. We cover a lot of topics in this book, but they are all rooted in the same concept: preparing a family business for succession.
Succession
can mean many things. It could mean passing the business on to family members or selling it to a competitor, or to employees, or to a private equity firm. It could mean shutting it down. It could mean continuing to work in it even as other family members take on more responsibilities. The definition of a happy succession event is unique to each family. But the bones of a good succession are always the same.
Ensuring all the relevant family members are appropriately involved in decision-making and communicate well with each other.
Creating a vision for the future and seeing it through.
Understanding the three perspectives unique to family business—Family, Owner, and Business—and how they influence decisions, plans, and actions.
Getting the right help at the right time to make the right decisions.
Often, I meet founders who are their own worst enemy. They say they want to get out of the business, but they cannot bring themselves to relinquish control. They stand in the way of the very growth that is necessary for the business to survive because they don’t trust the next generation, who likely wants to do things differently than they did. They are afraid of change, which often comes down to questions of trust. They may be looking at their children the way parents tend to, seeing them as kids who couldn’t even remember to take out the garbage, and conclude there is no way they can hand the business to them. This is not unique to you, nor is it a recipe for a smooth succession. But it can be addressed.
We are not here to tell you what to do. True, we tell our clients what to do every day. That’s because we know our clients and their unique situations and can come up with the right solution for each of them. Even though small businesses are similar, they are not all the same.
Rather than tell you what to do, I wrote this book to help you think—to think about your situation from a fresh perspective, to think about your problems with new insights, to think about your options with a new understanding of what is possible. As you go through the book, you’ll find prompts to help guide you toward the most appropriate information.
You’re reading this book because, even if it’s just in the back of your mind, something is bothering you. You need help finding answers. If we were working face-to-face with you, the first thing we do is understand the nature of the challenges you face, so we can tailor our advice. Since we can’t have a conversation through the pages of this book, we’re asking you to have that conversation with yourself by using our prompts and questionnaires.
This book doesn’t have exact answers for you; we want you to use it as a road map. Many business owners, when they think about planning for the future, will consult with a lawyer or an accountant who works with them. While that can be useful, remember that those individuals have a particular perspective on a particular slice of your business and your life. We believe in a