Family Walking Together

If we’re honest with ourselves, the events of the past year have forever changed us. Our daily lives have been affected, and we may find we have doubt in the certainty of once stable institutions and the routines of our lives. Your long-held plans may have been altered, or you may feel unsettled and uncertain of your path forward for your business and your family. Even prior to the disruptions of the past 12 months, many business owners struggled to plan for their succession. Procrastination, brought on by denial, fear, and the busyness of the day, crowd out planning for your business and your family’s future. If you’re uncertain about your current plans, or if you have been a procrastinator, now may be the time to contemplate your desired future. 

To move forward with confidence, consider spending some time thinking about what values matter most to you and what you would like your legacy to be. Start by envisioning the future of your company with and without you. What values matter most? For some, owner legacy, maintaining culture, acknowledging employees, and taking the company to new heights are important. For others, family harmony, financial independence, and community are most important. 

As a business owner, you need to plan on two fronts: your business as well as your family. We sometimes refer to this as dual mindedness because of the unavoidable interactions between business and personal plans. Consider your goals related to your financial needs and wants, your successor owner(s), and the nature and timing of your transition. The plans you make must be aligned if you are to successfully achieve both your business and personal goals.

By identifying your values and developing an action plan, you’re more likely to achieve lasting results for your family and business. By communicating the vision you hold for your business and family, BKD Private Client Services (PCS) advisors can help you design an action plan to reach your goals by looking at every aspect:

  • Exploring your financial needs and wants, as compared to the value an owner has built, both inside and outside the business. This lifestyle needs assessment helps determine whether an owner will meet his or her personal financial goals and provides guidance on the timing and possible transfer choices available to the owner. 
  • Tax advisors  often assist in crafting an estate plan allowing you to transfer your wealth to your intended beneficiaries as efficiently as possible to achieve your desired goals. You should review and revise that plan every few years and most certainly when there’s a major family change, a change in your business, or a major change in legislation. 
  • Developing and implementing the investment strategies for diversifying your portfolio, and making sure this portfolio structure is aligned with your overall goals. In addition, our PCS team can advise on the tax effects of the portfolio when combined with your other income streams, including the business. Tax laws have been changing at a record pace, and that’s unlikely to slow down going forward. Having tax advisors who stay abreast of these changes and communicate key changes will help keep your overall plan as up to date as possible.

On the business front, owners should develop plans to build value while reducing the natural dependency of the business on the owner. This subtle orientation goes a long way to helping ensure the owner can transfer the business, regardless of the path ultimately chosen. This slight shift is important whether you desire to sell your business, transfer it to the next generation, or simply just turn over day-to-day operations to management. Here are a couple of items to consider:

  • Business owners are pulled in multiple directions. Part of managing risk is considering where to focus your time and energy. Most of your time and energy should be dedicated to the business objectives that are going to produce the greatest return while balancing and managing risk to achieve your personal and family goals. Recognizing this is often the easy part. Building a top-notch team around you, including company management, will allow you to focus on what matters most.
  • Business legacy preparations will benefit you whether you’re looking to keep the business in the family or enhance the transferrable value for a sale. Contingency planning also should be part of the conversation, as we know the road map may not match life’s realities. 

For example, consider a client who’s the sole owner of a very successful construction company. After nearly 30 years in business, he had tried to pull back from the day-to-day operations, only to find performance suffer. As the pandemic began to take hold, he was feeling stuck. After spending some time exploring his exit options and really focusing on what mattered most to him, he found focus and was re-energized. He realized he wanted to create a company that could succeed in perpetuity for the sake of his employees. Not knowing whether his younger son would eventually succeed him, he committed to growing his management team, professionalizing his company, and growing through small add-on acquisitions. With a horizon of five to seven years, he committed to spending more time intentionally mentoring his son. He also worked with his team of advisors to modify his estate plan to address his goals for his other children. Today, he’s “working on the business,” knowing that he has options. If he’s successful, he’ll transfer to his son. He’s also considering a sale of the business for greater value to a third party.

Certainly, there’s a lot to consider and a lot to do, and often an outside advisor can serve as a guide. Since plans can take years to implement, it may be beneficial to have someone, such as a BKDnext® advisor, at your side, keeping you focused and moving forward. It’s also important to have a team of professionals you can rely on, whether it’s with financial planning, employee stock ownership plans, business valuations, or estate and tax planning. 

If you’re stuck or procrastinating, by gaining clarity on your values and what matters most, you will be able to move forward to define your goals for both your business and family. Ultimately, these goals will provide you with much-needed direction, all while reducing stress. As you pursue your goals and business value that isn't dependent on you, you will find you have more time to focus on other life goals—and you may even find you spend less, not more, time in the office. 

Looking for more resources to help you prepare for the future? Visit our BKDnext® page for insight on business succession and continuity planning and our Private Client Services page for insight on financial and wealth management services. Check out the first insightful article in this series: Building Confidence in Uncertain Times – Moving On.

Read all the articles in this series:

For more information on this topic, watch the archived webinar Building a Confident Future with a Holistic Approach

For more information, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.

FORVIS Private Client services may include investment advisory services provided by FORVIS Wealth Advisors, LLC, an SEC-registered investment adviser, and/or accounting, tax, and related solutions provided by FORVIS, LLP. The information in this presentation should not be considered investment advice to you, nor an offer to buy or sell any securities or financial instruments. The services, or investment strategies, mentioned in this presentation may not be available to, or suitable, for you. Consult a financial advisor or tax professional before implementing any investment, tax, or other strategy mentioned herein. The information herein is believed to be accurate as of the time it is presented and it may become inaccurate or outdated with the passage of time. Past performance does not guarantee future performance. All investments may lose money.

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