You’ve spent years building and nurturing your business. There were days when you wore too many hats and ran out of time before the to-do list was done. You’ve seen firsthand how hard work pays off. And it was worth it. The same can be said for when you’re ready to let someone else take over. The work you put in up front makes it that much easier to hand over the keys when you’re ready. In our final part of our survival guide for entrepreneurs, we take a look at succession. How to put together a strategy, what factors to look at ahead of time and all the emotions that go along with it.
Many business owners don’t take the time to develop a succession strategy for when they want to – or need to – leave the business. But the time to think about succession – whether you decide to sell or bequeath the business – is while you’re still in good health and the business is strong. That way you’ll be in a good place to negotiate and won’t be forced to make decisions under difficult circumstances. Planning ahead can create a stability that helps the business thrive before, during and after the transition.
This stage is the doozy. Not only are you attached to a business that you’ve nurtured from idea to startup to maturity, you’ve likely got your own identity wrapped up into your role as business owner, emotionally connected to its history of growth and success.
Make no mistake, the transition phase can be bittersweet – a mix of loss, relief, exhaustion and, eventually, elation. You’ll have gone from the heady days of hope and hard work, through the slog of growth and daily operations, and now you are thinking about giving up control. This is the time when you need to redefine your role, whether to remain tangentially a part of the business or fully hand over the reins to someone else.
Like with any retirement, redefining yourself can be harder than you think without the construct of your professional identity. Without the responsibilities that dominated your time, you may feel untethered, which can cause a different type of stress. What does the next “act” look like for you? Hobbies, travel, family, a new business? Think it through to avoid future regrets.
That burst of joy, that feeling of dreams coming true, may spring up at the first sign of an interested buyer and a large financial gain, or the first time you see your successor handle a difficult negotiation and you can see a new chapter unfold for both of you.
The other side of the coin is a feeling of is that all? Once a sale is final, a feeling of boredom may set in. It may be difficult to get energized about something else compared to the go-go days of starting a business. Like with any major shift, finding a new normal takes time. You may be inspired to start another venture or you may feel deflated. Every retiree will face this in one form or another; it’s a process to come to terms with a new pace of life. But don’t worry, you’ll get there.
Business succession is complex, but you and your advisor can tap into strategies to help refine your plan. Options include specialized trusts (e.g., revocable living trusts, intentionally defective grantor trusts, grantor retained annuity trusts) and self-canceling installment notes and intra-family loans. Some assets will require more legal footwork to handle properly during the legacy planning process, such as real estate, intellectual property, and certain types of stock, business partnerships and promissory notes. And your advisor can help you understand the advantages and considerations of each. Together, you’ll also want to think through how to provide an inheritance for a child who is unwilling or unable to be active in the business, as well as your plans should you have to leave the business before you’re ready (e.g., disability, divorce, distress or disagreement).
Launching, running and saying goodbye to a private business is not for the faint-hearted, but the rewards can make it all worthwhile. Expert guidance can help you make objective decisions even when riding the emotional highs and lows that come with being a business owner. Even better, that guidance will help you see – clearly – what’s next for you.
Sources: HBR.org; columbusceo.com; due.com; foundr.com; yourstory.com; exitplanning.com; sba.gov
Did you know that 82% of all U.S. consumers consider corporate social responsibility when deciding what products or services they buy? This staggering statistic suggests that as an entrepreneur you can’t afford not to make giving back one of your key goals. Not only can it lift your bottom line, it can lift the spirits of your employees and elevate your brand. Here are four ways giving back can benefit you, your business and your staff.
As you think about increasing your philanthropic endeavors, here are some steps you can take:
Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.
Sources: Entrepreneur; Cone Communications; Bloomberg; The Motley Fool; Marketing Charts; Entrepreneur; IgniteSpot; Raymond James, Inc., The Balance
Your brand is the essence of what you do and how you do it. It’s how you are perceived as a company, what you deliver, and your logo and visual brand elements, the uniqueness of your products and services and your reputation – all rolled into one. With so many things at stake, how do you protect your brand?
In 2018, the owners of internet sensation Grumpy Cat® took on a huge beverage company claiming that it used Grumpy Cat’s name without permission – and because they had filed trademarks on Grumpy Cat, they won $700,000 in court. Begin with filing basic legal protections for trademarks, patents and copyrights and consult an attorney who specializes in your industry. Set up Google alerts to make sure your brand name or product isn’t being used by someone else. But besides these basic brand building blocks, there’s so much more to protecting one of your most valuable assets.
Once you’ve covered your brand basics, look at some of the more intangible brand protections you can create. It all starts with building something worth protecting, something you are proud of. With all the time and care you put into building your business, make sure to live your brand personally. Your brand and mission should be reflected in person, online and in the way you interact with your community as a business. Present yourself at the office with professionalism and respect for others. Make interactions with customers and vendors fun and engaging. Personifying your brand wherever you go and with whomever you meet can go a long way toward ensuring your brand aligns with your own values and ethics as well as your customers’.
Social media is the modern day word of mouth – it can sink or lift your business. Create a handbook of expectations for employees online and in real life. Offer pointers and even copy examples of how you want them to mention your company online and in social media channels. Employees spreading goodwill is one of the most powerful tools you have at your disposal.
Suppliers don’t deliver on time, shipping gets delayed, there are thousands of ways things can go wrong in your business and customers may not get what they ordered or expected. When KFC UK ran out of chicken, they won the social media day by creating memes about how slow their chickens were to cross the road – and set up a website to find out where the chickens were. Take a cue from KFC and offer specific, complete and detailed apologies to anyone who is inconvenienced – and turn the snafu into an opportunity to connect and demonstrate your values.
When it comes to bulletproofing your brand, here are some basic steps you can start with:
Sources: USTPO; Yahoo Small Business; U.S. Copyright Office; Forbes; Business2Community; Entrepreneur; Small Business Trends; JC Social Media