The Great Recession of the late 2000s wreaked havoc on most of our plans in some way. Plans to buy or sell a house, plans to fund a college education, plans to move up in our careers to a better job – all had to be postponed, downsized, or even abandoned until the economy started moving again.
The downturn also affected succession planning for Baby Boomers, many of whom set aside long-term necessities while dealing with short-term realities.
A recent story at campdenfb.com cited a 2016 Kreischer Miller report, which surveyed family businesses in Pennsylvania, New Jersey and Delaware, and found that barely over one-third of those senior-generation business owners had a clear succession plan. Just over half of the respondents had no plan at all, although nearly two-thirds expected to pass their businesses on to the younger generation within the next decade.
“In 2010, the first of the Baby Boomers turned 65. At that time, our country was two years into the Great Recession and most family business owners were not even contemplating retirement; they were focused on keeping their companies afloat,” the report said.
Certainly we can all understand that it’s difficult to plan for the future when you’re just trying to keep your head above water. But what have they been doing for the last five years? It doesn’t take that long to come up with a plan, does it?
The Kreischer Miller study found that a fifth of the respondents who lacked a plan were in the process of developing one. Fifteen percent of respondents said their planning had been delayed by the age or ability of the next generation, while another 12 percent were planning to sell.
And of course, a rebound of the economy at large does not guarantee a commensurate rebound for each individual business. Many of those that survived may still not have rebuilt their fortunes to pre-recession levels.
For those Baby Boomers who are playing catch-up with their succession plans now, The Alternative Board offered these tips from executive business coach John F. Dini:
- Choose a successor whose skills compliment yours, but don’t expect them to necessarily be as up to speed in all areas of the operation as you are.
- In order to maintain the values and culture of the business, understand and take into account why you run it the way you do when choosing a successor.
- Get an appraisal to ensure accurate valuation.
- Make sure you have the proper documents, including new employee agreements and stock buy/sell documentation, and the proper planning, including not only a financial plan but a management succession plan.
- When you retire, let it go. Your successor can’t run the business effectively if you’re always there looking over his or her shoulder.
So get with the program. What choice do you have? You can’t take it with you when you go.