There seems to be a false notion floating around that somehow, we’re going to get everything in order tomorrow. That tomorrow, when we wake up, it will be the perfect day, where we will have ample time for the planning and legal work needed to minimize risk in the future.
We talk a good game, but that’s not what happens. Life is messy and full of distractions.
Today will not go as planned. So, what was planned for tomorrow remains undone for yet another day. I’m not referring to mundane tasks. I’m referring to the heavy lifts in business around succession, governance and transition that most owners just do not want to tackle. There is always tomorrow, they say, until there’s not.
As a family business owner, it’s critical to understand there are events that will affect the transition of your business. In fact, one out of every two reading this will be impacted by an event beyond your control. And if you haven’t run through the checklist to prepare your business, you’re not only putting the business at risk, but your family as well.
Think all this is a bit dramatic? Below are real situations I’ve witnessed over the years:
We talk a lot about the 5Ds — death, disability, divorce, distress and disagreement — with good reason: All business owners will exit their business, yet only half will do it on their terms. The other half will scramble.
And, by the way, a 5D event doesn’t have to happen directly to you to disrupt the business. Think about the fallout if it involved:
Begin by adopting the mindset of “my business is always for sale” (and, actually, that’s the way it should be.)
Working with the mindset that your business is always ready to be sold means:
All these things will not only make your business successful today, but attractive to potential buyers as well, including internal successors. Ultimately, building a business that’s transferable means that it can run without you and that’s also the best way to survive one of these 5Ds.
Do the right things to position your business for whatever life throws your way. It will be more financially successful, more fun to operate and will better protect those you love.
Life is messy, but the future of the business doesn’t need to be. Make the commitment to tackle one “what if” today and check it off your list so it’s done.
Tom Garrity is managing partner at Compass Point Consulting.