Who should be the successor of a family owned business when the founders are no longer available, willing or capable of continuing to run it?  That’s definitely a mind over money matters choice. 

My friend and colleague Dawn Fotopulos, a much sought after small business advocate and coach is the Founder of Best Small Biz Help.com, The Solopreneur’s Lifeline(http://bestsmallbizhelp.com/meet-dawn-fotopulos/).  She says usually one or two people are in charge of the business and have been the ultimate decision makers and they must be willing to delegate authority before they’re ready to sell or turn the business over to be run by someone else.  Why?  Fotopulos says because such a transition requires a three year on-ramp/off-ramp time frame to do it successfully and suggests the following: 

• Think about succession at least three years before you want to transition
• Delegate authority and not just tasks to your key proven people
• Seriously consider non-family members as viable leaders of the business 

If you’re the founder of a family business, are facing this decision and considering appointing two people to run the company and use an accountant as a referee – Fotopulos says you might want to reconsider.  She is a firm believer that you can never have a 50/50 split in ownership. 

“It’s a recipe for disaster,” she says.  “Designating more than one owner in a succession plan doesn’t work.  Someone must ultimately be in charge.  That person needs to understand the mission of the business.  Although a business should be able to run independent of the founder,” she goes on to explain, “it only can when the owner delegates authority regarding decision making and not just delegate tasks.”

A succession plan takes time.  So does identifying the right person.  Mentoring a successor requires good, time consuming, on-the-job training, nurturing and giving adequate lead time for a smooth transition.  Most family business founders haven’t done that or identified their successor because they’re structured the business around themselves.  Even if the owner/leader has identified the person to succeed them, often they can’t let go or they don’t think far enough ahead to implement change and find that it’s a crisis that forces putting a succession plan into play.

Lost time is lost money.  Forward thinking about the transition of power is a bottom line issue.  Mind over money really matters when it comes to this decision.  It should be made from the mind of a good business owner rather than the heart of a hopeful parent/founder.

Fotopulos says the successor boss must be responsible for the business viability year in and year out.  The entrepreneurial generation (founders) made the sacrifices but need to be sure that when the second generation (adult children) takes over, their willingness or motivation often isn’t the same.  Thus the s suggestion to consider a longtime, loyal employee – a person who is considered your critical second in command – to become your successor.

When choosing the person to succeed you in your successfully run and profitable family business, as you consider who best can do that, remember:  It’s your money so take it personally (TM).  It applies here more than ever before.

Here’s to your health and wealth.

TAGS: Communication Skills, entrepeneurs, financial planning, Women and Money

One of my dearest and oldest in life friends, Gary, who will be 84 this winter – had an epiphany a couple of weeks ago.  He finally got around to telling me about it in a series of joyful conversations recently, the first of which began with:  “It has hit home what you did for me, Valerie.” 

What I did for Gary was talk to him about why he deserved and could afford to give himself the gift of comfort and finally update and improve his home where he has lived for more than 15 years.  

It was nearly a year ago that Gary began talking to me about improvements he needed to make around his northern California condo.  It was about six months ago that friends began helping him do that.  The problem was – the project never got beyond the talking stages and Gary started feeling “stuck” – unable to do anything with all the little things he felt would/could make his nest a little cozier. 

All I did for Gary was translate – It’s your money so take it personally ™ for him. 

I spoke about his savings (I’m his executor so I know his financial circumstances) and that he should enjoy his money and make it work for him.  His remodeling wishes were modest:  make a lovely garden of his backyard that would include an area where he could grow a few vegetables and herbs; get a new couch, easy chair and finally a big screen TV (his set was from the late 80s).  I reminded him that he deserved these things.  I also reminded him that, though longevity is a trait in his family, what was he waiting for to use his long saved money?  

He told me that my “translations” were the catalyst that set the wheels in motion for him.  That he began to feel influenced by a new perspective on money.  What I translated for Gary was that having confidence about the comfort of his home could bring a relaxed state of mind.  As he accepted that thought, he says he realized that he was embracing a whole new orientation about how he thought about his money and himself.  “I was stuck,” he told me.  “My security blanket was that I needed to hold on to my savings, period.  I’ve released the need to be attached to my money that way anymore.  Money has taken on a new meaning.  A true meaning.  Money is something to be used for one’s benefit and to benefit others.  My security,” Gary went on to say, “comes from another base now – which is:  let go of some money to accomplish a vision of the life/comforts I deserve.”

Gary believes his new home environment and surroundings will thoroughly be enjoyed by others, too.  “Money is personal,” he said, “and in that sense can be a personality builder and it has done that for me.” 

The bigger story is what Gary – as a result – confidently decided to do for himself.  I encouraged him to hire a professional organizer who could do in short order (and for a set, reasonable project budget) what friends had volunteered to do to help but never really got around to doing.  I referred him to Anne Navach, a woman I’ve known for years (she and I had been neighbors and pregnant together 30+ years ago) who takes organizing services to a new level (mzorganization@yahoo.com). 

Just five weeks ago Anne, Gary and I had a long conference call, determined his plans and got things in motion.  Last week, as he gazed out into his new and almost completed dream garden, he called me and said:  The view from my living room easy chair is just so beautiful and expansive.  But I go outside and that’s where the impact is the greatest.  My favorite place is right in the center so I can look at everything.  I’m really going to enjoy this.” 

Gary’s reward for being willing to recalculate his relationship with his money provided him with a sense of release from needing to be so attached to it that he denied himself simple comforts. 

Here’s to your health and wealth.

TAGS: elder financial needs

The comment below came from Matt regarding my July 23rd post “The Dollars and Sense of Caregiving and Self-Caring” which talked about becoming a parent to your parent(s) and handling their financial needs while trying to keep your own financial goals on track: 

“Great article…very helpful…even for us guys:)  I agree that children need to know their parents’ financial resources, as you say. What’s the best way to start the conversation about it, if your parents are reluctant?” -Matt

The reality is that most everyone’s reluctant to talk about money – so why should our elders be any different? 

Adult children are reluctant to bring up the subject.   “I don’t want my parents to think we’re counting the inheritance before their gone,” 55-year old Olivia, the eldest of four adult children told me.  “We don’t want their money.  We’re all doing OK for ourselves.  We just need to know what preparations they’ve made and how to help their Golden Years be just that.”    

It’s hard to face the fact that our parents, the people who took care of us, are getting old and may now need assistance in decision making and caring for themselves.  Discussing money with aging parents can be difficult.   And when they push back (act reluctant) about the forward progress you’re trying to make on their behalf (show you the money/their financial situation) – what’s an adult kid to do? 

Delaying conversations about their estate planning and retirement isn’t the answer.   Perhaps the best way to get them to show you their money is to show your hand.

I broached the subject with my parents by telling them I was getting all of my important personal papers updated and that I might need some help from them regarding dates, childhood illnesses, family health history and so forth.  I first assured them that I was very healthy, that there were no health issues that were causing me to prepare my will but since I had moved to a new state I wanted to be sure my legal papers were all in order.  They were immediately engaged because they perceived it to be about me and for me.  That was the first of many incremental chats that ultimately became conversations about their health, money and end of life wishes.

In the years leading up to their deaths six years ago at ages 78 and 84, my Mother was willing to keep me up-to-date on all their affairs.  Dad wasn’t.  He was still in charge.  The old soldier, retired Air Force Lt. Colonel that he was, told me he had all the necessary paperwork “signed, sealed and in a three-ring notebook” and that it would be given to me “when the time is right.” 

This plan didn’t give me a sense of well-being but I didn’t want to be confrontational.  I knew that Dad’s “when the time is right” could be when they found themselves in the midst of an illness and that the well-spouse would present me with the binder that would help me help the well-spouse carryout decisions they’d made.  It was Mom who, just a few days after that conversation, without ceremony or much comment – presented me with their three-ring notebook, told me to go make a copy of everything in it and return it before Dad got back from errands. 

Less than a year later, my father had a silent heart attack, was hospitalized and in grave condition.  Three days after Dad, my mother suffered an acute gall bladder attack, had emergency surgery and her previously slight confusion became full blown Alzheimer’s post surgery.  I was emotionally devastated.  Both parents down at the same time.  But at least I had a plan.  Their plan.  I had the contents of their three ring binder which my Mom had “gifted” to me months earlier with all their major decisions and documents.  (I was doubly blessed.  I found Dad’s original binder under lock and key in their small safe.)

Convincing your aging parents to show you their financial papers and documents is a conversation that needs to happen.  And according to MetLife Mature Market Institute’s ”Ten Tips for Talking to Your Aging Parents” (www.metlife.com) – the conversations should begin while your parents are still in good health. 

In addition to Tip #1 which is starting discussions early, MetLife suggests that you:

• Include other family members:  Get all the issues on the table and gather support from siblings and other relatives.
• Explain the purpose of your conversation:  That you want to be able to do the right thing for them as they age.
• Understand your parents’ need to control their own lives:  Remember they have a right to make their own decisions even if, at some point, you may need to balance their independence with their safety.
• Agree to disagree:  Don’t try to bully your way through.  Their wishes should prevail unless their health or safety is in question.
• Use good communication skills:  It’s more effective if you offer options rather than advice.  Express concerns, listen, don’t be afraid of silence, use open-ended questions that foster discussion rather than ones answered with “yes” or “no”.
• Ask about records and documentation:  Know where your parents’ insurance policies, wills, health care proxies, living wills, trust documents, tax returns, and investment and banking records are located.  Start this discussion by asking where they keep their papers and whom you should contact in case they’re incapacitated.
• Provide information:  Be a resource for information for your parents.  They may need information about legal and financial options available to them, so provide materials for them to read and look for opportunities to talk with them about the information.
• Re-evaluate if things aren’t working well:  The best approach is always to be willing to assess why things aren’t going well.  You might need to suggest that your parents talk to a third party – such as a geriatric care manager or financial planner.
• Treat your parents with respect:  While old age can be a rewarding time, it’s also often a time of loss of loved ones, of health, and of independence – so reassure your parents that you will be there for them as they age.

So Matt, I hope these thoughts and the specific information from experts at MetLife will help you figure out how to get a conversation going with your Mom and Dad.  Just know that it will take patience and repeated/ongoing conversations to get them to trust revealing their financial issues to you.  Remember many of our parents are of a generation that considers financial matters – private.  Don’t get frustrated.

 Here’s to your health and wealth.

(MetLife Mature Market Institute is MetLife’s informational and policy resource center on issues related to aging, retirement, long-term care and the mature market and is staffed by gerontologists.  “Ten Tips for Talking to Your Aging Parents” http://www.metlife.com/assets/cao/mmi/publications/consumer/.)

TAGS: aging parents, documents, Elder caregiving, elder financial needs, end of life issues, records