Archive for the '02_02_Succession Planning' Category
Jan
29
The government shut down took a toll on furloughed employees and government contractors, reminding us of the need for financial emergency preparedness. A 2015 study from Pew Charitable Trusts found participants’ emergency funds underfunded in spite of income levels. Causes of financial shock include income loss (hours and wages cut, jobs lost) and unexpected expenses (car repairs, house repairs, uninsured illnesses and treatments) and are followed by long financial recovery periods. The Pew found that lower-income families took three times longer to recover than higher-income families. There is also an emotional toll to pay. In the case of job loss, the higher the income and/or age, the longer it takes to get a new position. Personal examples of financial shocks are cited. The author recommends that business owners save 6 – 12 months after-tax income (depending on the size of the business) with an additional 3 – 6 months of business expenses put aside. She recommends that rank and file workers 45 and older save 6 months of after-tax income, with younger workers putting aside at least 3 months. Taking care of yourself is a lesson here and also knowing that people who prepare for financial emergencies tend to be better savers for retirement and are better at accumulating financial assets.
Dec
28
The author is a proponent of time management and goal setting. She plans her vacation time with her family, sometimes taking international and domestic trips and sometimes relaxing at home to refresh her energy. As part of her life goals, she enrolled in a Ph.D. program and achieved her goal in 4.5 years. She was the first in her class to reach the goal. The author’s mother has guided her to be goal oriented and make good use of time. She will spend the next 5.5 years to achieve tenure by publishing academic research. She also mentors other women in the financial services field and the CFP designation. She has worked with many successful owners of privately held businesses and urges others to use time and goals to direct their lives toward success and prosperity in 2019 and on.
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Oct
30
Financial planning professionals (FPP) take a positive step toward succession planning when they provide business owners with a comprehensive financial plan. Recommending life insurance to minimize liabilities and provide for business continuity for business owner/operators is no substitute for such a plan. But succession means different things to different advisors. The three types of succession (employee, customer, investor) do not benefit equally from life insurance or other financial products. Also, personal, business and economic timing impact an owner’s ability to successfully exit from the business. FPPs should feel free to refer the clients to a succession planning specialist in the same manner as referring to an attorney or CPA to provide their clients with the best results.
To read the entire article click here.
Oct
28
Research by Dr. Azoulay at MIT and the U.S. Census Bureau which studied 2.7 million start-up founders showed more founders over age 50 compared to over age 30 had successful exits from their start-ups. Success was defined as exiting through IPO or acquisition and employment in top 0.1% five years from inception. The author points out that some articles on the subject may have misconstrued the research to encourage older entrepreneurs to form start-ups and to use their retirement assets for funding. The author shows that while age contributes to industry-specific experience and market knowledge that may indicate future success, many factors contribute to firm success. But there are other ways that start-up founders exit from their firms regardless of age including death of the firm from which loans cannot be recouped. Start-up founders should seriously consider the consequences of spending down retirement assets to fund a start-up in their 50s.
Oct
14
In a recent California Lutheran University School of Management fireside chat, former financial services executive Sandy Brown discussed her life and career and offered advice for success. Ms. Brown grew up in a small town in Indiana, faced down sexual harassment as a teenager, and learned competitive strategy while playing tennis. Her executive successes included creating diverse work units open to innovation which were popular with the internal workforce. Ms. Brown’s advice to future managers for achieving success and personal goals is threefold. First, network strategically by participating in three professional associations and one nonprofit organization. Second, don’t bad-mouth anyone. Third, if at first you don’t succeed, stop whining and move on. Having this encounter with Sandy Brown reminded the author to be intentional and proactive to achieve an unmet personal goal of serving on a board of directors.