Chances are your business will not successfully transition to the next generation. Only about 1 of 3 small businesses survives the transition from the first generation to the second generation. We think we’ve uncovered the biggest culprit for this lack of success. While most small business owners can tap into their attorneys, CPA, financial planners, and insurance agents for great guidance and advice about the best and most tax efficient way to structure and fund the transition of their business, they rarely have a competent and knowledgeable source to help them with transitioning the day-to-day management of the company.
Unfortunately, the most common training approach to a transition is to have the next generation follow the current owner around for a while so “they can do what I do.” Then after several months or years they hand over the reigns to the next generation with both parties wondering if the new owner is really ready or not.
This is where MVP comes in. We help our business owner clients and the next generation comfortably transition the day-to-day management of the company in a way and on a timeframe that works for everyone involved. At the end of the day, the best and most efficient tax structures won’t alleviate the stresses caused by not having the answers for and the plans to address questions that are racing through the minds of both the current business owner and the next generation.
The current owner’s questions might include some of the following:
- How do I know when the next generation is ready to take control?
- How do I teach the next generation everything I know about the business?
- How do I let the next generation learn from their own mistakes without damaging the company?
- How do I let the next generation know what they should be worrying about?
- How do I ensure that my business lives beyond my involvement in it?
- How can I be helpful and avoid being an impediment in the transition?
- How can I be sure that once I step away that I won’t get sucked back in to run the business if things head south?
- How do I make sure I’m fair to all the kids? Who should be in charge?
- What am I going to do next? What does “retirement” look like?
- How do I know the business will be able to afford to pay me for the purchase of the business over the next several years?
While the next generation of ownership might be thinking:
- How do I know when I’m ready to take over?
- What happens if this doesn’t work out?
- How do I stop the current owner from meddling once the transition has taken place?
- How do I know the current owner won’t get cold feet?
- How do I know I’m not paying too much for the business?
- What do I say if I decide I don’t want to take over the business?
- How do I change my leadership style to be more like the current owner?
- What if the current team won’t follow my lead?
- How do I part ways with an employee who is best friends with the current owner but is no longer a fit for the organization?
Neither a tax advisor, attorney nor insurance agent are properly equipped to really deal with the people issues and other challenges involved with a transition of the day-to-day operations of your business. MVP utilizes our 7 Keys to Success to build a customized framework for the successful transition, which results in both the current owner and the next generation knowing when the time is right to pull the trigger on the transition with confidence.