1/10/2006
Success Planning

By SCOTT WOODROW, BA, CA, Senior Manager

The entrepreneurial business environment is unique due to the multi-disciplinary contributions of business owners.

As the pace of business accelerates due to advances in technology, growth and competition, it’s not hard for an owner-manager to become entrenched in the day-to-day activities of the organization. However, as the general population continues to age, the need for consideration of a succession or exit plan is critical.

Owner-managers should not lose sight of the purpose of their enterprise — that is to maximize shareholder value. In order for organizational value to be maximized, consideration needs to be given to the best strategy to attain that value.

Entrepreneurs need to take a step back from the daily rushes, and evaluate the business, its strengths, weaknesses, threats and opportunities to determine the best courses of action and establish short-term, mid-term and long-term goals.

An often lost concept, resulting from the fast pace of the business environment, is a “plan your work - work your plan” philosophy.

An effective plan is both introspective and also looks outside the organization, requiring the business to re-evaluate its mission statement and identity, and appropriately map out the environment in which it operates, including its competitors, suppliers, customers and enablers.

Establishing an effective business plan on these concepts enables the organization to manage its growth effectively and realize its vision and goals.

Once a business plan is implemented, the owner-managers are better equipped, with the clarity gained, to decide on the pursuit and execution of a succession plan or an exit plan.

Each of these plans requires consideration of many factors and the integration into the organization’s operating environment. Consideration needs to be given to effective tax planning, corporate structure, management competencies and the effectiveness of its financial and operational processes.

An organization poised for success with a sustainable infrastructure may be an attractive investment target for private-equity or mergers and acquisitions. Alternatively, the stability gained will allow successors to more effectively integrate themselves into the organization and allow them to maintain and further enhance their predecessor’s vision.

It’s difficult for the owner-manager to both physically and mentally step back from the operations of the business enough to objectively create and evaluate appropriate strategies.

Often, a simple retreat that removes the owner-manager from the day-to-day constraints of the business operations and the physical environment can be enough to allow the decision-makers to establish and plan their vision.

At Soberman, we have an integrated team available to assist in the facilitation of such a retreat. Our business advisors include tax and accounting professionals, business valuators and mergers & acquisitions (M&A) specialists.

We can assist in the documentation and implementation of many components of the business plan and move to maximize long-term shareholder value. Contact your Soberman advisor if this is a topic of interest.

This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this publication.