How to Exit Your Business When You're the ?Franchise? : Grenell ...

A client and good friend asked me to write this article because he has, and is, living it. He also has a real desire to do something that will help other family and closely held business owners to cover all the bases they need to cover as they begin to think about moving to the next phase of their working life.

My client/friend, let?s call him George, has been facing, at various times and with various frequency, all the necessary tasks that must be planned for and completed to enjoy a successful exit from his business. As we close in on the final 3 to 5 years before ?pulling the pin? he has reflected on all that has been accomplished, and what else needs to be done.

I met George about 9 years ago when he was 56 years old. He was owner of a successful sales agency. George had been working in the business for 30 years at that point and was beginning to reap some of the perks that come with ownership. He was beginning to think about how to more fully involve the next generation and what planning needed to be done to do that. They were beginning to look at their insurances and business agreements to make sure everything was up to snuff. But as most business owners end up doing, he dropped the ball because he was spending all his time working in the business rather than spending quality planning time on the business.

Fast forward to today and George is still the owner of a successful sales agency, the next generation is still pretty much on the outside looking in after an average of 12 years apiece as employees. George has no idea what he?ll need financially to retire, what his business is worth, how to get the business to the next generation or even if the next generation is qualified for ownership He?s concerned about what he?ll do for health insurance, how he?ll replace the perks, what about the real estate, and on and on. George is thrilled with the next generation?s work ethic and demonstrated skills and abilities but no one knows if they have the skill sets to own a business.

As we began the exit planning process to clarify all of the above and more, George was absolutely amazed at all that has to be considered when he is ?The Franchise.? Let?s take a look:
1. Will vendors respect the next generation as owners?
2. Will bankers be comfortable with the next generation?
3. How will he retire without bankrupting the business?
4. How can he replace the company car and expenses thereto?
5. What about health insurance, long term care and life insurance currently being paid through the business?
6. What needs to be done to determine the next generation?s skill sets?
7. Can we develop leaders or are they already there?
8. Do we have a strategic plan that aligns and creates accountability throughout the organization?
9. Will the next generation?s spouses be okay with having them put their signatures on the bottom line and maybe collateralizing their homes?
10. How do we integrate all the corporate and personal finances to make sure all these questions can be answered?

Needless to say, George was overwhelmed. My initial advice was that you can eat an elephant ? one bite at a time. We have had a retirement needs analysis completed, the business is being valued by an expert in the industry, the next generation is undergoing executive assessment using industry standard tools, the CPA has brought all the books up to today, and we are progressing ? one bite at a time.

The result of the process will be a business that succeeds to the third generation (part of that 15% that actually do) and will grow with great focus and enthusiasm. ?The Franchise? will become an emeritus/senior advisor and the next generation of ?The Franchise? will carry the ball. This time, however, all the planning will be kept up to date so that when we move this great company to the fourth generation it will be much easier to accomplish.

Bruce Grieshaber, Certified Business Exit consultant?
Senior Consultant
Grenell Consulting Group

Categories: Action Plan, Articles, Business Strategy, Closely Held Business Advisor, Exit Planning, Family-owned Businesses, Goal Setting, Implementation Plan, Strategic Planning, Succession Planning ? Tags: business continuity, Exit Planning

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