Planning the Future of Your Business: Where Are You Today and Where Do You Want to Go?

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Planning the Future of Your Business Where Are
You Today and Where Do You Want to Go?

• Vermont Businesses for Social Responsibility
  Spring Conference
• Thursday, May 17, 2007

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The panel of experts

• Each one of you!
• Rocki-Lee DeWitt, PhD.
• Dean, University of Vermont, School of Business
• Allison Hooper
• President, Vermont Butter Cheese Company
• Dann Van Der Vliet
• Director , UVM Vermont Family Business Initiative

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For today

• Part I Where to Start?
• Part II Where Are You Today?
• Part III Where Can You Go?

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If you learn only three things today

• START NOW!
• Succession planning is important at every stage.
• KNOW THYSELF!
• As owner
• As leader
• INVOLVE OTHERS
• Family
• Stakeholders
• Professionals

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Family Business Facts

• More than 30 of all family owned businesses
  survive into the second generation
• 12 will still be viable into the third
  generation
• Only 3 of all family businesses survive into the
  fourth generation level and beyond.

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Why do closely held businesses fail?

• Inadequate estate planning
• Failure to properly prepare and provide for the
  transition to the next generation
• Lack of funds to pay estate taxes
• In 47.7 of family business failures, the
  transition and ultimate collapse of the firm was
  precipitated by the founders death.

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Why Prepare?

• Succession faces all businesses and owners.
• Careful planning drives critical thinking and
  limits reactive decisions.
• If you do not plan, someone will do it for you
• Provides for a semblance of continuity. despite
  unforeseen circumstances.

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Part I Where to start?

• Stage of Business Development
• What are the financial resources and leadership
  required by the stage?
• Founding Limited dollars and limited brains
• Growth Never enough dollars and never enough
  brains
• Maturity Market share to generate cash throw
  off and appropriate decisions about where to best
  reinvest cash
• Decline Graceful exits and transitions
• Leadership Assessment
• How important is control of business decisions
  and personal responsibility for the legacy of a
  business to you?
• How capable are you of leading?
• Ownership Assessment
• How important is wealth creation to you?
• How capable are you of being the ongoing
  financial resource that equates to the ownership
  position?

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Part II Where Are You Today?

• Stage of Business Development
• Potential for Additional Growth
• Financial resources and leadership requirements
• Ownership assessment
• Leadership assessment

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Part III Where can you go?
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The Big A-Ha!

• There should be a match between the three
  components stage, ownership and leadership
• You may need other people and other peoples
  money This is not a character flaw

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1. Goals Business owner

• Time line
• Financial
• Manage the plan.

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2. Goals Business leader

• Family members
• In business
• Out of business
• Partners/investors
• Employees
• Others.

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3. Clearly define stage of business as it relates
to owners exit goals

• Early stage founder
• Owner - entrepreneur
• Not yet profitable but perhaps saleable
• Growth
• Succession plan as contingency, added value
• Mature
• Stable cash flow
• Positioned in market
• Declining

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4. Business Valuation

• The valuation is only as good as the information
  and cooperation that you provide to the analyst
• Choose an accredited valuation analyst don't
  have Uncle Bob do this it's too important
• Cost - 5,000 - 10,000 depending on the level of
  analysis and nature of report (oral, limited,
  comprehensive)
• Time to complete - from the time you make the
  first call to an analyst to the time you get a
  completed report - 4 - 8 weeks most of this time
  is spent collecting information.

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5. Assemble a transition team

• Professional advisors
• Financial
• Legal
• Personal
• Family
• Board
• BOA
• BOD
• Peers
• In process
• Completed process
• Industry experience

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6. Explore sale options

• Keep in family
• Outright sale
• Internal sale.

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7. Have a contingency plan!

• Death
• Disability
• Loss of business value
• Failure to secure sound management or transition
  team.

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8. Identify successor (s) future management

• Key positions
• Tools needed to succeed
• Develop skills
• Provide time and space.

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9. Develop manage actual plan

• Written documented
• Stick to goals and time line
• Share with others
• Family
• Employees
• Stakeholders.

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10. EXIT!!! LEAVE!!! RUN AWAY!!!

• A sustainable business succeeds beyond the
  founder
• Truly let go!
• Let others succeed
• Or perhaps.

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start a new business!
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• FINAL EXAM

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If you have learned only three things today

• START NOW!
• Succession planning is important at every stage.
• KNOW THYSELF!
• As owner
• As leader
• INVOLVE OTHERS
• Family
• Stakeholders
• Professionals

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Questions?

• Rocki-Lee DeWitt, PhD.
• Dean, University of Vermont, School of Business
• Allison Hooper
• President, Vermont Butter Cheese Company
• Dann Van Der Vliet
• Director UVM Vermont Family Business Initiative
• http//uvm.edu/familybusiness
• http//uvm.edu/vbc