Exit Coach Bill Black interviews Top Advisors for Tips, Ideas & Precautions for Business Owners who want to grow and protect their company value and plan for a successful Business Sale or Transfer. Listen daily so you can be well-planned!
Episodes
Sunday Feb 16, 2014
Sunday Feb 16, 2014
The following is the second of a 3 part article by Louis Tucci of L. Tucci Financial LLC.
You can hear his full 20 minute interview here at www.ExitCoachRadio.com on Tuesday, 2/18
Anticipating the Needs and Concerns of Others
We know that anticipating the needs of others has a positive effect on the overall success of a business. To help alleviate the stress and anxiety associated with making this decision, it is useful to anticipate the concerns and needs of others by preparing in advance. One way to do this is by using an outside advisor or team of advisors to guide you through transition planning before turning to ‘insiders’, i.e. those closest to you in the business.
The Use of Outside Advisors in the Early Stages of Planning
Planning an exit or a succession of your business is a lonely task at best. Having access to a team of experienced and objective external advisors can be very helpful during the initial planning stage. While it might be tempting to look within the organization for guidance and assistance, keep in mind that core employees and/or insiders generally lack the experience needed for this type of planning. In addition, you will also want to give careful consideration to the inherent conflict of interest that exists with insiders / managers, as they are likely to consider the impact that these changes will have on them personally, making it difficult to provide you with completely objective and unbiased advice.
How and When to Bring Insiders into Your Circle of Trust
After an initial stage of planning, where you get educated on the exit options and begin the process of executing on your strategy, you will eventually need to bring specific members of your leadership / management team into the planning process. Determining who to trust (as one of your insiders) and who will be the best and most effective advisors, can be a challenging task and careful consideration and thoughtfulness is in order.
As a general rule, you want to begin with one or two trusted insiders who are working at a strategic level with you in the organization. It is expected that these senior managers can understand what you are sharing and, perhaps, even see the benefits of future ownership of the business in new hands.
An Internal Communications Plan
In any business scenario or situation, communication is a critical component and a key to success. Without clear and concise communication, outsiders (and insiders alike) may begin to speculate or fret over what the future holds. No matter the level of internal input or consensus achieved, it pays to develop a detailed list of all individuals directly impacted by the eventual succession and exit.
For some folks, the owner’s exit may mean a promotion and/or greater responsibility. For others, having the owner move on may mean the end of their employment within the company. In some cases – where the owner manages key relationships to the enterprise – a tailored communication plan is necessary to assure relationships will remain intact and not be damaged through the succession.
The process of detailing the anticipated impact on each of these individuals is hugely valuable to owners and helps them think through the likely scenarios where others will feel the change. Having a documented “Succession Playbook,” which considers all possible scenarios, adds a dimension of organization and planning to this process which should help you, the owner, get a higher level of comfort with this inherently challenging task of communicating change through the organization.
L. Tucci Financial LLC
Louis Tucci
310 Passaic Ave.
Ste 203
Fairfield, NJ 07004
973-582-1003
ltucci@financialprinciples.com
www.ltuccifinancial.com
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