How to Keep a Business Family Alive

I recently attended a great panel discussion facilitated by Emily Kerr of BMO on Succession Planning for Family Businesses. The panel included David Bentall, Laura North and Kim Comeau of BMO.?

As a former founder of a Solly’s Bagelry, a small family business, I am curious to know what life-lessons other family business owners have learned. As a BEI business exit advisor, I serve the transition needs of families in business. My mission is to help business owners benefit from their life’s work and exit on their own terms and conditions.?

?85% of businesses in Canada are family-owned and generally perform better and outlast any other form of business. A 2019 study by the Business Enterprise Institute says 80% of business owners plan to leave their business in the next 5- 10 years. Yet only 20% have any kind of plan in place. Planning makes sense when you are starting a business. So why wouldn't it make sense when you leave one? Most business owners don’t even have a business continuity plan in place if they should die suddenly or become unable to work.?

?There is a lot of emotion attached to leaving one’s business. Someone coined the term “your business is? both your baby and your lover”. I am sure many business owners can relate to that - I know I can. It was very hard for me to leave behind the business I helped build. It was a loss, the size of which I was not prepared for. Solly’s business defined me in many ways - what I created, what I did, literally who I was. That fear of losing who you are, your identity, is common among many long term business owners or life long professionals. Maybe that’s why so many owners wait so long to exit the business.? And many are prompted by a sudden change in their health or an unsolicited offer to buy their business.?

?David Bentall, whose family is well known to anyone in Vancouver, says "conflict delayed is conflict multiplied".? It is vital to get the family member’s feelings and desires on the table early. That way, solutions can be crafted that will be fair for everyone.

Conflict during a family business or any business transfer can often occur, with the risk of either temporarily or permanently damaging the relationships or sinking the deal. There are also marked differences between generations in family businesses. David Bentall remarks that “Each generation in the family business has its own legacy”. The first generation likes to stay close and “mind the shop.” The second generation often prefers to work remotely and research suggests most businesses don't survive beyond the 2nd Gen.

No matter which generation you are from, it is critical for the founder to define and share transition goals upfront with all family members. An exit planner is trained to help facilitate these sometimes-difficult discussions and uncover opportunities for collaboration, consensus and agreement.??

?One of the key issues in a family business transfer is the transfer of “authority”. Who has the final decision? The reluctance of the founder to “let go” and the frustration of the “business active children” (BAC) is an underlying pain point many experience. A proposed solution from David Bentall was that family business founders adopt an “apprenticeship” mentality to succession planning. As a BAC gains skills, experience, competence in a leadership role, the founders can slowly start letting go of the reins. A phased-in “apprenticeship” approach to authority is best practice for BEI exit planners and has been proven to work since the days of the “blacksmith”.?

?Business exit or transition planning starts with the owners setting SMART goals. What does your happy exit look, sound and feel like? Preparing a comprehensive plan is the best investment you can make in the success of your business exit. A professional exit advisor can help prepare and execute the plan while you focus on what you need to do most, which is building as much transferable value, into your business as possible between now and the day you walk away happy.?

?Finally, David Bentall recommended business owners hire an exit coach. “You need a counselor when you have a problem, you need a coach when you have a goal” I agree.?

One thing we know for sure, from the experience of owners who transitioned out of their business, is that proactive exit planning, well in advance, is the key to a successful business transition. Setting exit goals and being very clear about assumptions and expectations at the beginning of the process is the proven path to success. That’s where an exit planner can be of tremendous value. We help the owners create and document the exit plan, assemble the advisor deal team, facilitate and project manage the process to ensure the deal team meets the goals and timeline of the owners.?

I will leave you with one final fact: “70% of business owners surveyed are unhappy one year after their exit”. This huge degree of unhappiness was not simply a result of the actual amount of money that ended up in their pocket. It was because of the added stress and unforeseen challenges and complications that the process created. Many of these potential challenges or red flags to a smooth exit would have emerged through the planning process and been fixed. Most owners don’t plan their exit in enough detail because they don’t know what they don’t know - they have never sold their business before! My own business exit experience provided me with valuable lessons in business hindsight.?

My extensive training in exit planning and years of experience in business advisory has added to my understanding of best business exit practices. I am passionate about helping owners plan their exit so they can maximize the transferable value of their business, minimize the regrets that leaving it creates, and move onto enjoying the fruits of their labors.

Book a Discovery Call and learn how exit ready you and your business are and how you can leave your business with no regrets.?

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