Title: Case Study Presentation
Location: Family Firm Institute Study Group
Description: Edward Rosenfeld presents a Case Study of the “A” Family, a West African entrepreneur who did succession planning right.
Start Time: 9:00
Date: 11/01/2011
End Time: 11:00
Nov 082011
What happens when an unfunded buy-sell agreement has been triggered for 20% of a $2 million small business?
The actual cash needed out of pocket can be 50% greater than the payment after taxes of profits. Over 5 years to fund the cost of buying just 20% of the business would require over $687,000 in profit at a tax rate of 35%. If profit margins are only 5%, this would require new sales of more than $13,700,000. Life and disability insurance can fund this liability at a reasonable cost.
Click here for a great article:
Life Insurance Selling. A Summit Business Media publication.
Business Planning
Three Circle Model
Foresight Advisors can help you keep your business engine tuned up and in good working order. In closely-held partnerships as well as strictly family-owned businesses we work in a modular approach with one or more of the three systems that make up the business.
Management Consulting Services
- Recruit a Board of Directors or Advisors
- Develop strategic business plan
- Advise company leader and/or successor on leadership
- Advise on other structures pertinent to the professional operation of the company including Management Team Meetings
- Crisis Management
- Design a compensation and key employee recruitment and retention program
A strong management team is important to the wealth engine. They are the people who keep the engine lubricated and running at optimum levels.
Newsletter Archive
Of Special Interest
“Privately Held Business Succession Planning – A Crucial Process.”
Edward S. Rosenfeld, Journal of Retirement Planning, March-April 2008
“Inner City Housing, Family Business Planning Success Story: A Case Study.”
Edward S. Rosenfeld, Journal of Retirement Planning, November-December 2008
Volume 1, Issue 1 – “How Long Do You Plan to Travel the Business Highway?”
Volume 2, Issue 1 – “So You Love to Drive in the Fast Lane?”
Volume 2, Issue 2- “Transitioning the Intangible Assets.”
Volume 2, Issue 3- “My Dad Can’t Let Go.”
Volume 2, Issue 4- “Why Have a Compensation Policy?”
Volume 3, Issue 1 – “Ensure You Have a Choice.”
Volume 3, Issue 2 – “Go Beyond Dreams.”
Volume 3, Issue 3- “Not Interested in Retiring?”
Volume 3, Issue 4- “Why Formalize the Business?”
Volume 4, Issue 1 – “Managing Change is Key to Success.”
Volume 4, Issue 2 – “A Vision or a Dream?”
Volume 4, Issue 3- “Building the Foundation.”
Volume 4, Issue 4- “Perception is Reality.”
Volume 5, Issue 1- “When Family and Business Overlap.”
Volume 5, Issue 2- “Avoiding Collisions on the Family Business Highway.”
Volume 5, Issue 3- “The Family Charter and Governance.”
Volume 5, Issue 4- “Know Where You Are Going.”
Volume 6, Issue 1-“Beware the Golden Handcuffs.”
Volume 6, Issue 2-“Consider Both Sides of the Coin: Advisory Boards.”
Volume 6, Issue 3-“The Day Before Thanksgiving: Family Councils.”
Volume 6, Issue 4-“Please Pass the Potatoes: Five Steps to Successful Collaboration.”
Volume 7, Issue 1- “Managing the Seven Dwarfs: Running Effective Meetings.”
Volume 7, Issue 2- “When Business Owners Put the Cart Before the Horse.”
Volume 7, Issue 3-“What Keeps You Awake at Night?”
Volume 7 Issue 4 – “Teaching Kids to Drive”
Volume 8, Issue 1-“You Can’t Cruise Forever”
Succession Planning
Problems arise because all matters pertaining to the business get mixed up in the overlapping areas. Individuals play multiple roles but mix them inappropriately or lack awareness of how to separate the issues. It is in these overlap areas that confusion reigns.
It is crucial to clearly identify where issues stem from and then move them into the circle in which they belong. By separating the issues in this way they can then be addressed individually, and before they become huge roadblocks.
Succession planning impacts all 3 areas of a family business and is therefore the focal point of the overlap area.
What is Succession Planning?
Three Circle Model
A detailed Succession Plan affects all three areas (circles) of a family business and is therefore the focal point of the overlap area. While it serves to protect the ownership and wealth of the business, it also involves the financial plan of the individual owner(s). Additionally, the strategies for management of a family business are reliant on an appropriate succession plan.
Once such a plan is in place, it becomes a great foundation for determining what else needs to be done, and what training or education will be required, to move the business along.
What Makes a Good Succession plan?
As entrepreneurs, our vision of “succession planning” is generally focused on wills, tax strategies, estate structures and financial planning tools. However, it is important to first identify your personal goals and then ensure that your succession plan, and the business itself, is structured around them.
The Line of Confidence ™ chart depicts how we guide families from the Inertia Stage, where they are unclear or unsure about what the future might hold, across the Line of Confidence, to the Implementation Stage where they are informed and excited about what they can build together as a family.
We call the left side of the chart, the Education Phase. Here we employ a variety of tools that inform and educate families so that they can develop the confidence to address the inevitable change in leadership of their family business.
So whether it’s a little uncertainty, a deeper fear, or just plain old procrastination that stops you, Foresight Advisors can help you move forward with confidence.