Plan For Decisions…Don’t Just Decide To Plan

Part 1 of a 4 part series

Provided by Ryan Barradas and Tim Young

Tough DecisionsWhat is succession and exit planning?  It’s a process that helps to facilitate one of two events and sometimes both.  First, it plans for the entrepreneur to eventually become financially independent of the operating asset as their primary source of cash flow.  Second, it could help the operating asset become independent of the entrepreneur as its primary driving force.  How can I walk away with enough cash or how can I get a competitive rate of return on my business asset? 

You will exit your business somehow, someday.  It can only happen in one of five ways: Death, Disability, Voluntary Sale, Retirement or Bankruptcy/Orderly Liquidation.  Regardless of your method of exit, in order to maximize your value and/or the likelihood the business will succeed you; the business must be managed as if it were for sale on any given day.  The same things that are common discounts at the time of transfer in a third party sale can sabotage an intra-family succession plan or sale to key employees.

As an entrepreneur, your big decisions are inseparable from who you are as a person. So your decision making is defined by your ability to arrive at unshakable gut instincts. You need a process that allows the subconscious layers of bias peel away and give rise to pinpoint wisdom about desired outcomes. You need to get to that place of instinctual decision-making you know and trust.

Without this level of clarity, you might move forward with planning for a little while, but when it comes time to execute, you’ll back away from the table. There’s simply too much at stake with your wealth, your business and your relationships to risk faltering.  This is why planning and decision making must bump up against objectives in all three realms: relational, operational and numerical.

In order to do this, it must transform from the traditional planning process to a decision making process.  For advisors, we all love great planning processes. But for you the entrepreneur, the planning really happens in the background.  What you need is a process that allows you to make pinpoint decisions about desired outcomes.   Where am I today?  Where do I need to go? Who do I feel responsible for? Whose feelings do I need to be mindful of? What are the business and personal risks I want to mitigate? What’s my time frame?  Once you create well-defined macro goals, decision making becomes infinitely easier.  The latest “flavor of the month” or other crazy business idea no longer derails or distracts you from your long-term objectives if they don’t pass the test: Do they help me accomplish all or a majority of my macro goals?  If not, move on. 

In the remaining three parts of this four part series we will help you to understand how to create a culture of succession and address it on five levels (ownership, management, leadership, relationship, and cultural), address why most plans fail, and finally how to get a successful succession and exit planning process off the ground. 

Ryan Barradas (ryan@wealthpoint.net) and Tim Young (tim@wealthpoint.net) are co-founders and partners of WealthPoint, LLC in Phoenix, AZ.  WealthPoint is a nationally recognized firm focusing in the areas of succession, exit and wealth transfer planning for entrepreneurial family groups.

WealthPoint Announces Strategic Partnership with Clary Executive Benefits

PHOENIX, December 20, 2013 – WealthPoint, a leading provider of succession, exit and wealth transfer planning to entrepreneurial family groups and affluent clients throughout the U.S., announced today they have formed a Strategic Partnership with Clary Executive Benefits to assist with the firm’s existing succession and exit planning clients. WealthPoint will also be offering this enhanced capability to its professional advisor network. “This will uniquely position WealthPoint to provide services to the mid-market executive compensation and benefits markets which are currently underserved,” said WealthPoint’s Managing Partner, Ryan Barradas. “Jim’s background, relationships, experience and expertise are unrivaled.”

Click on the link below to view the full press release (PDF):

WealthPoint Announces Strategic Partnership with Clary Executive Benefit

Wealth Relationships: A new way to think about your family and your affairs

For hundreds of years, affluent families have been guided by their advisors to steward their material assets. Attorneys, CPAs, investment and insurance advisors and financial planners all come to the table to help you identify the best course of action. The stewarding of your financial or material assets is actually only one-third of the process. The two additional elements are beginning to surface in more conference rooms and family rooms than ever before.

The second and third elements of planning include 2. the communication of your decisions to those who’ll be impacted by them, and 3. The quality of communication that exists within the family system in general. When all three areas have been tended to, families achieve holistically wealthy relationships.

Why is open communication with heirs important?

So many times we see families concerned that if their heirs knew of their substantial impending inheritance, it would rob them of drive and work ethic and implant a sense of entitlement that derails their adult life.

In reality, there are many programs and models available for mentoring heirs to be effective wealth owners. By beginning the process while you’re here to participate, you can observe and influence the training process. You can help ensure that the inheritance doesn’t derail the heirs and that the financial resources are used for great causes, not squandered. You can leave this world knowing that your heirs understood who you were, how you amassed the wealth and what you hope will happen with it in the future. That’s why communicating the nature of your decisions is so crucial to establishing wealthy relationships.

Quality of communication: not just what but how…

The third element of wealthy relationships is the quality of communication that exists or can be aspired to within your family system. Just like in marriage, the better the foundation for communication, the greater the likelihood that relationships can survive difficult times. This is a crucial and wonderful area that can be addressed during your lifetime regardless of the age of your heirs. Even relationships with and between adult children can be repaired and strengthened. Again there are entire processes and advisory disciplines based on the improvement of family communication.

Picture your heirs thirty years from now sitting around a family dinner table. What do you aspire for in the future of those sibling relationships and developing family units? Consider your ability to influence what’s happening at that family dinner simply by doing the heavy lifting to increase the quality of communication in your family today – to equip them with communication skills just as you’ve equipped them with morals, values and integrity. This is the third element of wealthy relationships.

If these aspects of planning appeal to you, ask your advisors how to bring the process and conversations to the proverbial planning table. And with the holidays approaching, there’s no better time for families to rally around their long term goals and commitments to each other.

Teaching Young People About Philanthropy: Begin With Gratitude

In our adult lives, we’re often naturally inclined toward philanthropy. Whether we give our time, talent or financial resources, doing so is a response to feeling grateful for our own good fortune. Many who have succeeded in business and career feel that much has been given to them to make their success possible – mentorship, training, education and opportunity. We find ourselves wanting to give back – applying gratitude to restore the equilibrium.

How do we teach and imbue the philanthropic cycle with young people who have yet to complete their first decade of life? Creating practices and awareness around gratitude is a place to start.

Embracing non-financial philanthropy

You can begin the process by sitting down with a grandchild, niece or nephew and discussing the aspects of life that make him or her feel safe or happy. Record the young person’s thoughts in a dedicated notebook that you’ll come back to for future parts of this adventure. After you’ve created an initial list together, ask the young person to specifically consider things that can’t be held in two hands – intangible things that make him or her feel safe or happy. This might include playing outdoors, laughing with friends or learning new things in school.

Through the course of your conversation, help the young person understand that to “have” isn’t limited to physical possessions. When you become aware of what you have that doesn’t cost anything, there can be an unlimited supply to give away.

Creating contrast: take an observation field trip

With your notebook in hand, take the young person out and about into the community. Visit a mall or a playground, a soup kitchen or a hospital. Select an environment that will stretch his or her thinking without being overwhelming or scary. Ask the person to notice what the people around them have and what they don’t have. Ask them to consider things that are intangible – that they can’t hold in their hands. This could be a special talent on the playground, a beautiful smile or an inclination to share.

Anchor the experience with gratitude

Consider creating a regular connection time to continue discussing what the young person noticed in his or her life and the lives of others. Help the young person understand the connection between being happy about your circumstances and being thankful. Awareness of gratitude takes people to that adult response of wanting to give – to restore equilibrium for all we’ve received.

Overtime you can transition your discussions to help the young person identify behaviors he or she would like to donate and to whom he or she wishes to donate. This could be as simple as giving a special smile to a kid at school, or as involved as going back to the soup kitchen to play games with or serve soup to the people in the room. Throughout your interactions remember to pause and be grateful for the experiences.

A New Year Offers the Gift of Pause

One of the greatest aspects of starting a new year is the opportunity for a clean slate perspective on longstanding opportunities or dynamics in life, family or business. We can choose how we see things and influence the actions that follow. We can choose to leave dormant projects or issues dormant, or we can raise them to the surface of our thinking, behavior and relationships. We can let pressing matters remain at the forefront of daily life or we can choose to tie up loose ends and take a step forward into new territory in a relationship or a business venture.

The New Year seems to offer both permission and bandwidth for contemplation and introspection. For planning and parsing things out. A new year is a clean sheet of paper from which to prioritize our energy, resources and focus.

Out of this clean slate thinking can arise a renewed sense of leadership and gratitude. If our own thinking is clear and more precise, it paves the way to lead others to clarity. It models the very behavior of taking time to assess or reset our priorities. If we take pause to consider, record and communicate what we’re grateful for, it can inspire others to follow suit. And the recipients receive the greatest gift of all: our undivided attention.

In a society where busyness and doing are celebrated over the simplicity of sitting still and doing nothing, the New Year is a chance to assess the direction and focus of our thinking and our activities. It’s a chance to be highly intentional as we step into a full calendar year of promise for family, career and business. A chance to choose outcomes and notice opportunities. To brush away cob webs that need clearing out and shine a light on people and projects that might warrant our focus.

Certainly every day that we wake up and step into the world is likewise an opportunity for this kind of reflection and assessment. Yet a brand new year offers momentum – a powerful point of pause.

Successful people are inherently great planners. They’re typically highly strategic. Looking ahead is embedded in their thinking. Intentionality is infused in their DNA. If you’re reading this article, that likely applies to you. Yet there’s always something left to evaluate. Something latent or pressing that needs a breath of fresh perspective or the opportunity for added focus.

If this resonates with you, consider setting aside some focus time to consider three relationships, issues or opportunities on which you’d like to focus. Perhaps it involves something you’d like to fix, pursue or communicate. Then make a game plan for following through. As you do so, celebrate the gift of pause that 2012 has bestowed upon all of us.