Unknowns Create Anxiety and Fear - Protect the Future of Your Franchise!
The continuity of ownership, leadership, management, and culture of your business through the next generation is our definition of succession planning. When a crisis hits the need for succession planning is emphasized that much more. In our country’s current climate with Covid-19, fires, flooding, the social unrest, and an upcoming presidential election, there are a lot of unknowns impacting our business and home environments. There are a lot of questions and concerns as to what the future is going to look like. In a recent conversation with a franchise CPA with Citrin Cooperman and a franchise attorney with Einbinder and Dunn, we collectively talked about what the new normal looks like for multi-unit franchises during and post Covid-19.
Even so, we find that many franchise owners are still hesitant to invest in succession planning. It does not matter if you are a new franchise owner, or if you have been at it for a while but still not ready to exit, succession planning is critical for you. It is the one thing that will ensure your vision, mission, goals, and long-term financial needs are met, as you intend them to be.
Engaging in succession planning confirms the vision you have for succession, as the multi-unit franchise owner, and it allows you to remain engaged with all succession issues along the way. This is especially important if family is at all involved in the business directly or indirectly. It is a process (not a project) involving ten interdependent areas which can greatly impact or alter one another. If you believe you have your estate planning taken care of that’s great, but it’s only one very small piece of the Succession Matrix®.
One simple way to break down succession planning into digestible pieces is to look at with the four F’s in mind:
- Federal Tax Laws
These are four areas we work through when designing a succession plan. They are woven into the Succession Matrix and we work through them in a way that helps you build value in your business. But really, what we hear mostly from multi-unit franchise owners who are resistant to go down the succession planning road is, WIIFM. What’s in it for me?
It is a legitimate question. What we like to share is that as you look at the future of your business consider that prospective buyers, banks, Wall Street, estate tax auditors, and business valuation experts all recognize business value is not based on today’s earnings. Value is dependent on the predictability that the earnings of your business will continue after a transfer of ownership occurs. Transfer of ownership does not mean simply when you retire. It could also mean when the unexpected happens, like what we are seeing with Covid-19 and all the other things impacting our business environment. It could be something happening outside of your control that impacts your ownership.
So even if you are not ready to retire, or are new to ownership, or maybe do not think you need to invest in more than estate and will planning, I recommend rethinking more broadly. Look at the environment we are in today and reflect on how rapid things are changing around us, and those other things which are out of our control. Do you have the peace of mind that your heirs or family members are protected financially and otherwise should your ownership change in the business?
Kendall Rawls knows and understands the challenges that impact the success of an entrepreneurial owned business. Her unique perspective comes not only from her educational background; but, more importantly, from her experience as a second-generation family member employee of The Rawls Group - Business Succession Planners. For more information, visit www.rawlsgroup.com or email firstname.lastname@example.org.
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