Success with succession – A matter of good timingChia-Li Chien, Ph.D., CFP®, PMP®, CPBC
Chia-Li Chien | Oct. 20, 2015
I absolutely enjoy travel, especially outside of the United States, because that’s when you know the least about your surroundings and you have to trust people you don’t know to lead you. In the Fall of 2015, I went to Japan for a business trip; the flight from Chicago to Tokyo was delayed 3 hours, and I missed my connecting flight to Okinawa. United Airlines took care of the overnight stay in Tokyo, but my client wanted me to take a 6 a.m., rather than a 10 a.m., flight out. That may not sound like much difference, but my body had not yet adjusted to the local time zone. I was physically exhausted.
That being said, the problem was the 6 a.m. flight–not my jet leg. The first flight out was at Haneda Airport, which is a 1.5-hour drive from Narita International Airport in Tokyo. I took a taxi at 3:20 in the morning to get to the airport. Well, I got there too early; the airport terminal was not open. This is a domestic-flight-only airport; most of the staff there speaks only Japanese. I could read most of the signs on the highway and in the airport, but could not speak the language. And yet, those I encountered were very nice and helped me every step of the way. They were courteous, as you would expect anyone from Japan to be.
In your business, you trust your team to lead you in the areas of its expertise. Those team members speak a language perhaps you don’t understand, such as accounting, finance, information systems, legal, leadership, etc. You place a certain level of trust in allowing them to lead you and your entire company’s future. One of my clients recently took my advice to focus on streamlining internal processes, which enabled his company to accommodate highly anticipated growth. To my surprise, his key management team was on board very quickly and dove right into designing the new stages of the process. I appreciated my client’s leadership in trusting me and his team to establish the new stage map and pinpoint where to improve. The key management team also oversaw the process improvement in each of their own areas and committed to integrate with other company teams.
Finke (2012) notes that the age for most effective financial decisions “peak[s] in the late 40s and early 50s.” Everyone, however, has a different trigger point in determining his or her prime age for making financial decisions. One fact that we can’t ignore is that when it comes to your business exit strategy, you want to be at the right time to plan for the transition. It is a complicated process not only to secure your financial future, but also to help your customers with on-going service and your team with employment.
Most of my clients start planning their succession strategy a lot younger than you might think. On average, they are in their early 40’s, not 60 or even 50. Their businesses are growing quickly and have matured enough to plant many seeds of improvement and help to capture intellectual property. Any intellectual property or process takes time to build and needs to be built early enough to get the right foundation in the business as part of the engine for accommodating any growth or situation.
This takes us back to my 6 a.m. flight from Haneda Airport. I had to get up very early and head out from Narita. Regardless of how exhausted I was, that was the best option. Your succession strategy may surprise you, too. You might think that a succession strategy is all about cashing out. It is not. In my previous article I lay out the Triple Bottom Line succession strategy we deploy when working with clients. You are the investor, you have your employees, and most importantly, you have their commitment to service your customers. And your customers place their trust in you to do the right thing—to have a succession strategy in place early. That way, you can ride out any economic cycle and ultimately achieve the Triple Bottom Line. It’s win-win for all stakeholders: you the investor, your employees, and your customers.
Plan early for business succession, just as you do for business success.
Finke, M. (July 26, 2012). Investing and the Aging Brain: ‘What Do I Do When I Get Stupid?’. ThinkAdvisor. Retrieved From: http://www.thinkadvisor.com/2012/07/26/investing-and-the-aging-brain-what-do-i-do-when-i?page_all=1