GGN Group, LLC Blog
Business Transition Planning - a blind spot

I was giving a talk recently and a question prompted an interesting story that I thought I might relate to you.  I had been introduced to a business owner and 2 family members, and of course we were talking about their business.  It seems they were very busy, each working about 60 hours per week.  They each handled their own accounts, from sales through project management (why will be the subject of another story).  I asked about business transition planning and the head of the family assured me that it was all taken care of.  They had legal documents prepared.  They had funded buy sell agreements.  And there were only two functions that the head of the family did that the other two didn't do.  So, I asked what the plan was.  The head of the family said not to worry.  He was going to train one family member to do one of the unique functions and teach the other family member, the other.  There, done, business transition planning taken care of.  After that was done he could exit the business and get paid for it over time.  So as I looked at them for a few seconds, I said, help me out here.  Each of you are working 60 hours a week.  So when the father leaves, to keep the income coming in that underlies the purchase agreement, each of the family members was going to have to work 90 hours since they had no plans or desire to hire anyone.  So what is the point?  Well sometimes the best laid plans could bear a little scrutiny from a business perspective from the outside.  Holes or concerns of someone not caught up in the situation can provide some illumination.  A small investment for future success in business transition planning.

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