27 October 2015 - 0:52,
by Tom Pryor
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For many Baby Boomer family-business owners, it’s wiser to exit the business via a gradual transition than leaving cold-turkey. The transition from working 5 workdays a week goes to 4-days, 3-days, 2-days, to 1-day a week and then blastoff to the next phase of your life.
The transition method to exit a family business is so simple it’s often overlooked. If you’re the business owner, in this plan you work 5-days a week during the 1st Quarter of 2016, 4-days a week during the 2nd Quarter, 3-days during the 3rd Quarter, 2- days during the 4th Quarter and then 1-day a week during the 1st Quarter of 2017 before exiting.
The 5-4-3-2-1-Blastoff plan provides direction to the owner’s life during the transition, structure for the business and confidence to business stakeholders such as bankers, suppliers and customers.
Here’s an example of how the family-owned business transition plan works:
- During the 1st Quarter you work 5-days a week. Your primarily focus is on reducing risk and a 1-page plan to grow the business. One of the risk reduction tasks is create a CEO Desk Plan. The desk plan lists your job activities, bank contacts, phone numbers of key people and passwords in case you’re unavailable due to an emergency. For a free Risk Reduction Checklist, send an email to TomPryor@icms.net.Boomer says, “I feel good that I am finally doing something about exiting the business. I’m optimistic.”
- During the 2nd Quarter you work 4-days a week. You begin working on both your Exit Plan and Enter Plan. You begin taking 3-day weekends. You review the 7-options to exit the business with a Family Business Advisor and select the option that best meets you and your family’s needs. Work with your Family Business Advisor to determine the business value. Also, begin defining opportunities that involve your strengths, passion and purpose that you can enter after you exit the business in months to come. NOTE: If you do not have a family business advisor contact TomPryor@icms.net or CLICK HERE for a list of family business advisors.Boomer says, “I’m enjoying my long weekends and feel real good about the exit plan I’ve written with my Family Business Advisor.”
- During the 3rd Quarter you work 3-days a week. You begin to map out the transition of the business to a new leader. You are now taking off Monday and Friday. Is the business growing? If not, make adjustments. Have one or more managers assumed some of your job activities? If not, consider promoting or hiring someone to be operations manager. The exit plan selected in the 2nd Quarter is in the process of implementation. Light at the end of the tunnel is getting brighter!Boomer says, “I’m learning that the business can operate without me being here all the time. That gives me peace of mind.”
- During the 4th Quarter you’re working only 2-days a week. Meet with your banker. Ask your banker if you’ve mitigated the risks to their satisfaction. Review and make changes, if needed, to either the succession plan or business sale plan with your Family Business Advisor. Ask customers, “Have you noticed any changes doing business with us the past six months?” Their answer will serve as a barometer of how well the business leadership transition is working.
- During the 1st Quarter of 2017 you are working no more than 1-day a week. The exit plan has been implemented. You are transitioning to what you want to enter. You seek out another family business owner that you can mentor through the process you have just completed. You Exit the business and Enter the next phase of your life feeling good about your legacy and what lies ahead as you enter the next phase of your life.