Jim called his advisor, Marla, to talk about an obstacle to his family transition plan that had taken him completely by surprise. “As you already know, I’ve been talking with my daughter about taking over the business. Since Mary Beth joined me seven years ago, she’s done a lot to help it grow and is pretty much running it now.”
“Is she still interested in taking over?” Marla asked.
“She’s interested. But my wife blew her top when she found out that Mary Beth and I had been talking. My wife has never cared a whit about the business, so I don’t understand the problem. I think I’m in over my head and need your help. What should I do? Can you help me?”
Marla paused briefly as a line from her favorite movie, Top Gun, flashed before her. “Yes,” she answered. “but it’s going to be complicated.”
Tom Cruise, as Maverick, was not referring to Exit Planning when he said, “It’s going to be complicated.” Like Jim, Maverick was in over his head and it took him an entire movie to work through the challenges, miscommunications, and misunderstandings. We might not have been able to help Maverick, but our Exit Planning advisors have the tools to help Jim.
Most advisors perceive family business transitions to be too complicated and time-consuming. However, Exit Planners, especially those brave enough to fly F-14 Tomcats or tackle family business transitions, relish the challenge of helping their owner-clients unravel complicated scenarios.
Exit Planning Is Complicated
In a way, most advisors are correct. Exit Planning—and transfers to family members in particular—is complicated in the sense that complicated issues are those in which components of the broader problem can be separated into smaller, digestible steps. It may be hard to notice at first, but there is a fixed order that allows one to deal with an issue in a repeatable manner. A complicated issue may seem overwhelming and impossible to get through until it is broken down into systematic, logical steps. Small wins can create momentum to complete the next steps.
Is a 1000-piece jigsaw puzzle complicated? Not if you have a systematic way to assemble it.
First, flip all the pieces face up. Second, find the edge pieces and create the edge. Third, group the pieces by color or image and so on. Any complicated process can be broken down into digestible phases to make the process less overwhelming and manageable.
CALLOUT: An owner’s Exit Planning situation is a lot like a jigsaw puzzle. If you stand back and look at all the pieces, the difficulties and challenges are obvious. But just as there is a process for assembling a puzzle, there is an Exit Planning process that transforms a jumble of information into a coherent plan.
Exit Planning Requires A Process
Is an estate plan, financial plan, or tax return complicated? As an experienced legal, financial, or tax practitioner, the documents you create as part of your profession may seem complicated to your clients, but not to you. By using processes specific to your profession, these tasks are straightforward. As effective as these processes are in your profession, they fall short when addressing complicated, messy, chaotic, and emotionally fraught family business transfers. For that reason, most advisors either don’t bring up the topic of family business succession or go along with their clients’ inclination to kick the succession can down the road. We think that ignoring the issue does a disservice to your owner-clients and is a missed opportunity for you.
Tune in for next week’s blog post on recommended actions that Exit Planning advisors should take when beginning to solve the family business succession puzzle.
- Transition planning for family business owners is complicated, not impossible.
- Complicated issues can be simplified by using proven processes.
- Understanding and deploying a proven process to help clients/owners create family business transition plans greatly benefit our clients and your practice.