In This Episode
Many business owners struggle with something that most people think should be a no brainer…taking a vacation. How come it can be so hard to enjoy the holidays with your family and friends without getting the shakes? How do you find the switch to turn things off? How do you not feel like Mr. Scrooge when you wish more people were working during the holidays? It can be maddening!
We have a lot of clients who are going through a transition of the business from one generation to the next (parents to kids and other relatives). There are lots of good advisors when it comes to structuring the transition to save taxes and do it properly. But how do you transition the day-to-day management? How do you as the boss step back? How do you as the “owner in training” step up into a leadership role?
There are some key things to do at the start. First you should get agreement that the time is right for a transition and how long should it take (e.g. 3, 5, 7 years). Then the current generation should look at testing out what it’s like to back off a bit by doing something like reducing work time from 5 days per week to 4 days per week so they can start to figure out what they’re going to do after the transition is complete. Will they be a man or woman of leisure or get into volunteering?
Don’t worry about “what’s fair” but instead “what’s best for the organization”? Things like, “who should be in charge” if there will be more than one owner. Don’t do a 50/50 ownership, someone should always have at least 51%. What about compensation? Not just salary and bonus, but what about other perks? Also, who is going to do what so you can ensure that there is a relative equal dissemination of duties so one partner doesn’t feel like she is carrying more of the burden? These and many other questions are key things to discover as part of the business transition process.