Preparing My Business for Transition

Date PublishedOctober 16, 2014
Article AuthorRichard Kneeshaw
Article TypePULSE Interactive Newsletter Oct. 2014
CategoryPULSE Interactive
PULSE Interactive

Preparing My Business for Transition

Current State
The Canadian economic landscape has been presented with an aging ‘baby boomer’ demographic challenge as boomers prepare for retirement. We have all heard of the impending ‘skills deficit’ as our economy faces the unprecedented migration of senior technical skill sets out of the workforce, at a time when whole industries are intending unprecedented growth. At this time, there is no replenishment ‘wave’ to compensate for the discrepancy … at a time when the governments of many developed countries are taking a more critical view of traditional immigration solutions as we seek to secure our borders. For you and I personally as owners / operators of a small to medium sized enterprise (SME) we have similar resource deficits on our immediate horizon. For example;

  • There are 1.2 million businesses in Canada, half of which (500,000+) are owned by baby boomers.
  • Boomers (however young at heart) are reaching retirement age, and must consider the mechanics of how & when their business will transition.
  • This creates a demand for (a limited pool of) buyers and financing, as we anticipate approx. $500 billion (CDN) in wealth transfer.
  • – 71% of Boomer SME’s intend to transition within the decade, while
    – 41% of those intend to transition within the next 5 years
    – 30% within the next 6-10 years.
    (Source: Canadian Federation of Independent Business. CFIB)

That is a lot of transition activity, having to navigate some known obstacles, including;

  • The ‘sourcing’ of a suitable successor … and the orchestration of succession planning.
  • Sourcing the funding a suitable successor may not have access to.
  • Market Valuation … along with all of the emotion surrounding what I feel my business is worth vs what ‘the market’ says it can (reasonably) sell for, as I cue for access to finite (human and capital) resources.
  • Not to mention the CFIB research demonstrating that 75% of business owners regret their sale within the first year of retirement, triggered by Insufficient planning, not understanding the process of business transition and not understanding the tax implications … let alone a personal transition strategy.
    (Source: Canadian Federation of Independent Business. CFIB)

Research also tells us that “Most companies are not sufficiently organized to mount business development. As a result, they do not receive the funding / investment they should have or could have received … had a planned, organized and controlled approach been taken.”

Desired State
So how does a business weather this transition you ask? The design, development and delivery of Strategic Business Planning is tricky, but essential. RMI engagements include the elements of Assessment and Planning … but what makes a successful transition, we believe, is managing the Implementation. That …our clients tell us is the single greatest value we return.

At RMI we call this, Linking Strategy to Execution. That is mission critical, because;

  • “Only 10% of strategy effectively formulated is effectively executed.” (Source: Fortune Magazine)
  • “The distinction between those organizations that survive and thrive and those that plateau and fail, is that successful organizations have a clearly defined Vision and a Missional Agenda to achieve it.”
    (Source: Conference Board of Canada)
  • “The risk is not in the planning, the risk is in the execution.”
    (Source: National Research Council)You need to define ‘What Done Looks Like’ … then reverse engineer and identify the requisite elements of time, talent and resources. We are often referred to as the Corporate-Sherpa. We have been there before. We know the way.

In planning your route, look for assistance to help marshal and integrate the services of;

  • Organizational Design and Development (Defining the ‘what, why & how’ of your business … facilitating a turnkey operation for your purchaser / successor, and making you more attractive and of greater value to both the market and the investor)
  • Optimized by Market Valuation (Merger & Acquisition Counsel as necessary)
  • Legal and Accounting (Navigating regulatory & governance compliance)
  • Facilitating Succession (With psychometric assessments, enabling domestic and international executive search capability)
  • Having Defined and Mitigated Risk …
  • Attracting Investment (Alignment with Private Venture Capital markets)
  • Affecting Transition ~ the original objective.

An RMI engagement brings the disciplines of both process and project management, having earned accreditation with all of the above mentioned services which we plan, organize and control. Arriving at your defined point of destination on time and on budget.

In so doing, realizing your Business Transition as a result of Good Management, not Good Fortune.

Richard Kneeshaw, BA. MA. CPP.
Resource Management Innovations
Okotoks, Alberta
Phone: (403) 990.6797

Thinking and Acting Strategically