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44% of businesses depend on their owners, but 62% of businesses have no successor chosen. No one spends time growing business or real estate assets without wanting it to succeed. Succession planning matters and it aligns your assets and your wealth with a strategy that will unlock value. Your goal should be to create a planned and profitable future.

Here is how you can understand your options.

1. Plan for the future.

You poured yourself into your business and your assets – giving of your time, energy, and finances. At this point, you need to consider that it is about the life you put into your work and not the other way around. Build your wealth to be a lasting bridge to a more profitable future and make yourself aware of the risks and that you have options First you need to start figuring out what you want to do, next you will want to consider what your goals are and ask questions.

Then you need to analyze your portfolio and your goals:

  • Do you have businesses and a real estate portfolio? Do you have real estate, multiple businesses and various investments?
  • What other assets do you have? Do you have any stocks, bonds, or other investments?

2. Understand the role your wealth plays in family and management

Many business owners have not yet established a framework for the future. They may not want to stop working but now that transition will have to happen soon. To achieve all their goals, they must go beyond maximizing the value and facilitating the transfer and instead find strategies that help in solidifying their legacy through the process of retirement. All of this can happen with a good retirement plan.

Planning can make life difficult and family can mire wealth and asset planning with significant complexity.  There are a number of issues that you will have to deal with and some considerations you will need to make. Things you may want to watch out for is community relevance, reputation, or family involvement. Somewhere in the lifespan of each multigenerational business entity, it has become more than a mechanism. When the leadership of a family and a wealth portfolio master the nuts and bolts of a succession plan, they can reach beyond the mechanical level, and see the big picture.

Here is what you need to consider:

  • Is your business ready? Do you have the right things in place – leadership, staff, and a strategic direction?
  • Have you considered who will take over your business and who will manage your assets? Will it be a family member, a leader in the business you can trust?
  • Have you set up a plan and created a family council to talk through all the questions?

Families that have a strong history of success know how much family values matter and that they need to be identical to the business values. That’s why they’ve been around since 1668 and there are other examples like Kongo Gumi (a construction giant in Japan), who have been around for 40 generations and where a family and business must align. Or the example of Fabricca D’Armi Pietro Beretta S.p.A who have been in business since 1526 and they’ve been around for 14 generations.

A good succession plan will divert these crises and help prepare you for the unexpected. Succession planning is not just important for the business but also for the future of your family. It’s about you and how you want to create a legacy for your wealth. A thoughtfully governed plan can be an aid to everyone involved – not only in terms of wealth creation, but for promoting harmony, personal fulfillment and shared purpose.

3. Build the right team.

Building the right team means having a group of specialists who can help you understand different parts of the process and give you a better chance at succeeding when your transition happens. For you to achieve this, you must go beyond maximizing the value of your business and assets and facilitating the transfer. In fact, your plan will need to consider all aspects of your wealth and how your team will help you to understand the process.

Businesses need to establish a framework for the future, but may be resistant to change and there re examples of businesses like this. The owner may not want to stop working, but know that they need to create a team. To achieve all of their goals, this plan must go beyond maximizing value and consider all the aspects of wealth and that is what this team will do.

Here is the team mix you may want to consider:

  • Lawyer – will assist with ownership documents, estate plans, will and trust documents, involved throughout the process.
  • Banker – involved with credit needs and financial situations. Periodic presence throughout the process.
  • Real Estate Brokerage – Determine fair market value for business, real estate acquisitions and other assets. Completes valuation of properties and provides advice regarding assets. Available early in the process.
  • Estate & Trust Professional – Estate Planning, Trust Management. Available periodically through the process.
  • Psychologist/Family Planning – Succession planning can include a number of family dynamics and emotional issues that can affect a business owner’s judgement. A family psychologist or councilor is a good addition when it comes to balancing family dynamics with financial impact.
  • Investment Advisor – Addresses financial needs. Enters process early.
  • Commercial/Small Business Banker – Supporting expansion and financing eventual expansion of business. Will have a periodic presence.
  • Lawyer – Assists with ownership documents, estate plan; will and trust documents. Involved through the process.

4. Cement your Legacy

Legacy is many things to many people. For some business owners, the term may connote nothing more than the continuation of business operations. For others, it may move beyond that into community relevance, reputation, and family involvement. Somewhere in the lifespan of your wealth and your business, it may become more than a mechanism for commerce and employment — it becomes an institution.

Eugen Klein, Royal Le Page Sussex Klein Group founder and principal, was recognized as the Top 40 Under 40 in 2013 and recently completed his term as President of the REBGV.  The B.C native started his career after he graduated with a Bachelor of Commerce Degree from the University of British Columbia. He founded the Klein Group in 1999, which is now an industry leading real estate brokerage in Vancouver. Follow our team on Facebook and Twitter @kleingroup or view our services at kleingroup.com

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