Passing on a business takes some planning

Wayne Bergman is a coach with the business coaching firm ActionCoach. He has 25 years of military and oil industry leadership experience.

Q: What are some of the biggest issues when a small- business owner wants to pass the business to his or her children?

A: The owner will not live forever, but the business can. There is nothing more important than planning the future success of the business and the family. The owner must be prepared for an honest and realistic conversation with the family about his vision and goals for the succession and the legacy of the business.

The successor( s) must have the resources and skills needed to sustain the success of the business. Set a target date and prepare the leadership team to be ready. The owner must be ready to step away. Select an internal successor who has the willingness to do what is needed.

The new management team must be ready. The successor has been trained and ready to be a successful leader. Transferring the owner’s knowledge takes planning, time and mentoring.

Q: How about third- party aid?

A: Develop a team of advisers to include: a CPA ( financials, tax planning, valuation/ appraisal); attorney ( business transfer, tax laws, estate); business coach ( owner accountability, leadership and team development, process and systems, increase business value); financial adviser ( retirement, wealth and estate plans); and insurance adviser.

Q: What’s the best- case scenario, and what’s the worst when it doesn’t work out?

Best scenario: The succession process aligns key players, inside and outside the operation, and agrees to sustain growth and implement the intention and vision of the owner. The next generation is innovative and acts as a cohesive ownership team to grow the business.

Worst scenario No. 1: The owner is unable to transfer ownership to the family prior to death. The transfer is complex and takes longer than expected, so if the owner is incapacitated or dies, potential disruption or failure is a serious risk.

Worst scenario No. 2: The business self- destructs due to family conflict. There are no clear criteria for managing the business.

Bergman