The secret behind using your business to create generational wealth
Let’s face it, starting your own business isn’t the easiest way to become wealthy. If you are a business owner, whether that business is full time, a side-hustle or another stream of income for you and your family, starting, running and growing a business is a lot of work. Most business owners wear many hats and sacrifice sleepless nights, going through the trial and error of figuring out what works and what doesn’t, building and training your team, and sacrificing time away from family and friends while they are building their business. You’ve been “going hard in the paint” and we see you!
If you’re like me, you didn’t grow up with rich parents and you probably know the importance of creating generational wealth; it’s the “alley-oop” for whoever comes after you. Chances are, you started your business for that reason; so that your kids don’t have to suffer financially, the way you did.
So now that you know that your business is an asset that can create generational wealth, how do you actually ensure that your business makes it to the next generation?
You see, most people think of the asset (their business) as generational wealth and that isn’t exactly true. Sure your business can create wealth, but what makes it generational?
Let’s play some one on one. I have the ball, I’m driving it to the basket, it’s clear for me to take a shot, but instead of shooting, I hold onto the ball and do nothing. Sounds silly right? You’re never going to win a game of basketball if you never take a shot! That is what it looks like to have a business and never create a succession plan for it.
My guess is that many of us are so worried about the day-to-day operations of our business that we haven’t given the “how to” much thought. Others have no idea this is even a thing because they never established a proper foundation in their business in the first place (more on that in the next article).
Keeping your business running and profitable is certainly a priority in a business owner's routine. But you have to think that at some point, you'll say “hasta la vista baby.”
Regardless of whether your plan is to work in your business for the rest of your life, or if you plan on retiring early to enjoy the finer things in life, you will need a succession plan to get you there. Surveys show that 70% of businesses fail to make it to the next generation and 90% fail before the 3rd generation. The last thing we tend to think about in our business is what will happen to it when we are no longer in a position to manage it.
When you decide to step back, what exactly will happen with your business? Will it be liquidated or be sold so the assets can go to your loved ones? Or be passed down to the next generation? Or do you prefer to gradually transfer your business to someone you trust? These are only a few of the options you have when you know longer want to manage a business, but you must plan for it!
Ideally an exit strategy should be part of your business plan and incorporated into your business strategy. Here’s the best part, creating a business succession plan can actually increase the value of your business! How? You have documented everything along the way making it easy for someone else to come in and step into your shoes. AND you have created a contingency plan for what could go wrong so that there is a solution to the problems before they ever arise! Think about it this way, would you buy a puzzle if you knew some of the pieces were missing? I’m pretty sure the answer is no, because you will never get to see the big picture.
Your business is no different and your succession plan is often the missing piece for helping to see the full portrait of the legacy you are creating. The reality is, without a succession plan, your loved ones will probably have no clue what to do in the business leaving them to feel like they’ve just inherited a burden, not a business! Your business and legacy is far too important.
Let me help guide you through this process to create a legacy your family can be proud of.