According to Gene… Succession Planning or A Looming Disaster – The Choice is Ours

According to Gene… Succession Planning or A Looming Disaster – The Choice is Ours

I have first-hand knowledge of an Alberta community that is at risk of losing its post office. Can you imagine having to travel a long way just to get something as basic as your mail? In that same way, a well-rounded selection of businesses is critical to the success and indeed future of any community. More specifically, I’m afraid for our community. I’m worried that without some action we will dwindle and atrophy in the future. Our future could be bleak. 

Don’t get me wrong. I want to be an optimist, but I feel there is a very critical point in time looming. As much as we may complain about a lack of energy and development in our town, 10 years from now we may look back at our current situation and the health of our local businesses as the glory days. Not to make generalizations or point out any specific examples, it is my personal opinion and observation that we should be wary of a few community dynamics that are currently underway.

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HERE’S WHAT’S HAPPENING

With our economic downturn, we have many business owners that would have (or should have) retired long before now are just able to “hang on” because they are well-established and can operate as a one-man shop.

Many of us have encouraged our children to seek opportunities elsewhere coupled with the fact that young people seem uninterested in taking over family businesses.

Current sales and the regional economy make it difficult to find buyers.

SO NOW WHAT

Owners hang on. They wait for something to happen. Unfortunately, the inevitably of health matters and life circumstances will force many hands. Whereas many owners thought their investment of building their business would someday payout, most businesses tend to sell for the market value of the equipment and stock only, especially if it occupies a rented location. Lenders simply do not lend money to buy goodwill, and there are few investors with deep enough pockets willing to pay for it anymore. It’s a matter of supply and demand. I am worried that businesses will simply close one by one. Each loss will signal another reason not to invest in our community It’s a slippery slope and I think… rather I know we need to be proactive.

WHAT’S THE SOLUTION?

Okay, so it’s fine to point out a problem, but how do we move forward? Unfortunately, what I have been referring to is officially called succession planning. And when I say those words the reaction I get is that I may as well be talking about life insurance. It’s as if nobody wants to think about death. In reality, good succession planning provides new energy and invigorates your business for long-term success and a rewarding change of ownership. There are many ways that business owners can find a buyer and successfully transition to a new owner, but they all require a few years of planning. 

Watch for more details in next month’s column. To be continued…

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