At the Speed of Fright (I Mean, Light)

The pace at which our world is evolving is one of those things that has become so common, we don’t always take the time to think about its impact.  Phones that are used to watch broadcast media, cars that don’t need gas or a driver to operate, personal “assistants” that can place orders on command, rockets that can essentially land themselves, mapping applications that make logistics a snap; these are phenomenal developments.  While these technologies and many others have made our lives easier, they have also presented significant challenges to the business community.  Consider the following:

  • Business model blow up.  The manner in which companies make money has changed dramatically in many cases, which cuts to the very heart of business; this is easily illustrated by the retail industry.  While stores used to be the primary shopping option, consumers now have access to a range of methods, including online, rapid delivery, subscription models, and mass media e-tailers.  Consumers have, in fact, come to demand these options, leaving companies to struggle to meet the pace of change, with many finding themselves in a too little, too late situation, unable to survive.  This disruption scenario is true in almost any industry.
  • Strategy break down.  In order to migrate a company through significant change, a key requirement is having a strategy that is proactive, comprehensive, and relevant.  These attributes are driven by having a thorough and timely understanding of the changes that are occurring in the external environment, including industry trends, technologies, and marketplace developments.  Too often, business leaders focus primarily on what’s occurring inside of their company, with a “they need us” mentality when it comes to customers.  This mindset is one that greatly jeopardizes the future of a company.
  • Resource reckoning.  New business models utilize resources differently; examples include the need for fewer people, different skillsets, roles that are held by technology, and utilizing strategic partnerships.  Each of these bring changes in workflow design, systems, processes, and costs (remember that costs directly impact pricing!).  Companies that do not proactively pursue the need to change how they work tend to get left behind at the worst of times, when more savvy competitors have implemented these methods, making it impossible for others to catch up and compete; which leads to this last point.
  • Financial shortfall.  Integral to a successful business is the ability to generate at least good financial performance (strong results are, of course, better), thereby creating the fuel to invest, grow, and sustain over the long term. When a company does not have the right business model, it isn’t in a position to build the appropriate strategies to utilize resources well and be competitive over the long term, which leads to poor financial results; it’s all connected.  Companies in this situation lack market relevance and are, too often, left without a future.  Think about what this means to a business leader who is depending on the transition of their company to someone else, as the basis to fund their retirement.

The reality is that many of the advancements that we live with today represent technologies that much of society could not have imagined even five years ago.  What will the next five years bring?  The next 10 years?  As technological advancement continues to accelerate, even the next two to three years will be highly significant.  Is your company ready to face this challenge?

Remember that challenge also brings opportunity, but only for those who are well positioned to approach it.  Learn more about the profound impact of disruption in the external environment, as well as how to take control and benefit from it by reading Defusing the Family Business Time Bomb.  The future of any company is based on its ability to continue to be relevant to the marketplace over the long term.  In today’s world, this is anything but a given.

MEDIA: Appearance on SET for Success (680 CJOB Radio)

Pleased to have appeared on SET for Success on 680 CJOB with Richard Lannon discussing my new book, Defusing the Family Business Time BombSince many business leaders expect that their company will be sold at some point in time, often to fund their retirement, it is critical to understand the many challenges that could stand in the way of this goal, some of which might be surprising.  Business leaders tend to not fully appreciate potential problem areas, failing to realize just how high the likelihood is that their company will be impacted, putting their future plans at significant risk in the process.  Some hold the view that they “have it all figured out” or “don’t need to address those issues”, bringing a false sense of security and trouble at the worst possible time.  These scenarios are, unfortunately, all too familiar in the case of family business.

While it is typical for many family businesses to experience the “aches and pains” that are associated with members of a company having longstanding, personal relationships with one another (think conflict, role uncertainty, and the strife that comes with life developments such as divorce, illness, and death), there are other challenges that are just as important.  The world in which we live includes a number of external factors that make these days like no other, including:

  • Demographic factors: aging Baby Boomer business owners have a limited number of potential successors.  Do they know it?
  • Disruption of key industries: new and complex business models and rapid digital/technological advancement could reduce expected valuations and make transition to new owners either irrelevant or much more costly.  Is the company of relevance to customers, now and in the future?
  • Dramatic change in the global economy: making strategic planning difficult, increasing competition, and escalating the cost of doing business, thereby shrinking profit margins.  Can the company compete on a profitable basis?
  • Uncertain tax rules: new and complex tax changes, restrictions to family income sprinkling, and a clawback of the small business deduction all impact profitability, investment opportunities, and access to capital. This challenge could be especially difficult for young entrepreneurs or successors who want to scale up the business for the future.  Is the company getting the right advice?

Take a moment and think about each of these significant developments.  Any of these areas is a lot to deal with on its own, but when combined, these factors have the potential to stop a company in its tracks, making succession or sale of the business unattainable.  Consider what the impact of this discovery could mean to a business leader, their retirement, the future of the company, and the family.

This book helps business leaders to understand the areas that need to be addressed, now, including practical guidelines for facilitating important conversations with key advisors.  Doing so not only helps to improve how a company operates today, but can also address the issues of tomorrow, including succession, sale of business, strategic partnerships, and seeking investment capital.  These areas are also of key relevance to entrepreneurs and potential successors, who face unique challenges of their own.

You can listen to our conversation hereContact us to learn more about how we can help; your company, family, and peace of mind will be better for it.

Defusing the Family Business Time Bomb: 4 Important Threats to Understand, Now!

This article was published by CMC-Canada in the Winter, 2019 edition of Consult

The Top 4 Threats to your Family Business in 2019

Many of us are familiar with family business leaders in our community; perhaps, you were raised in this environment or are managing a company yourself.  Family businesses represent a considerable segment of the Canadian economy and have the potential to be unstoppable; where everyone works together to move forward with common purpose.  Family businesses, however, can also be plagued with the conflict and strife that tend to be associated with relationships that are close, personal, and longstanding; this reflects the other side of the coin.  By their very nature, family businesses can be tricky.

There is something more, however, that business leaders need to be concerned about; something that could impact the future of both their company and their family’s wealth, and it is simply this: Family businesses are facing the most explosive challenge in a generation.  The reason?  Seldom have so many potential threats been evident in our external environment, many of which make headlines on a daily basis.  Consider the following:

  • Demographic factors.  Experienced advisors know that the majority of aging business owners do not have a succession plan and research has supported this finding over the years.  They also do not fully appreciate the reality that there are a limited number of potential successors, in terms of those who have the necessary skills, interest, and capital to take over a company.  This fact alone has the potential to halt business transition in its tracks.
  • Disruption of key industries.  The manner in which we live has, and continues, to change.  Consumers and companies procure goods and services differently than in the past, resulting in the need for new and complex business models, many of which are supported by rapid digital and technological advancement.  Companies that do not keep up with marketplace expectations not only face declining demand, but also the risk of obsolescence, in terms of transition to someone else.  This can be a sobering and disappointing reality for many business leaders.
  • Significant change in the global economy.  The daily headlines in our world are often characterized by widespread change, including in areas such as trade, tariffs, political alliances, and business requirements.  This ongoing evolution brings uncertainty, with the potential to significantly impact a company’s planning efforts, financial results, and valuation upon transition.
  • Uncertain financial times.  Recent tax changes in a number of areas have generated many questions from family business leaders, impacting areas such as income distribution and investment opportunities.  When coupled with increasing interest rates, accessing the capital that is so integral to business growth and transition strategies could become increasingly difficult, a challenge that especially impacts young entrepreneurs and potential successors.

Any one of these developments can have a significant impact, but when combined, it could create a situation that is impossible for an unprepared company to overcome.  When these areas are considered in the context of typical family business problems, the stage is set for unprecedented challenge; one that impacts families, companies, and Canada’s business community as a whole.

The reality, however, is that many business leaders are unaware of the degree to which these factors have developed, often as a result of not spending a sufficient amount of time to fully understand the external environment, including industry and market trends and developments.  Since this is clearly a critical time for business leaders and their families, Evelyn Jacks and I decided to write our latest book, Defusing the Family Business Time Bomb.  This isn’t just another “family business book”; rather, it brings a common-sense approach to addressing the many challenges that are associated with building a company that has the potential to be sold to someone else in the future, all during highly uncertain times.

Here’s a final thought: As business leaders in great numbers face retirement, it is only the well managed and strategically positioned companies that will have relevance in the future, enabling them to be transitioned to someone else for a “good to great” level of value.  This stark reality is something that must be recognized by both founders and successors alike.

MEDIA: CBC News Network Weekend Business Panel (January, 2019)

Starting off the New Year in studio for the CBC News Network Weekend Business Panel, alongside John Northcott and Elmer Kim.


As our world continues to experience economic, political, and technological change, our discussion reflected just that:

  • Turmoil in Venezuela.  In the face of leadership uncertainty and devastating economic and social challenges, potential US sanctions could significantly impact Venezuela’s oil industry.  What could this mean for Canada?
  • Ontario enhances autonomous vehicle pilot program.   Changes to an existing program will now allow some automated vehicles on public roads with just a passenger on board or a remote operator monitoring the vehicle.  When could we expect to see these vehicles on the road?

The Venezuela story is a reminder that developments in far away countries can impact us here in Canada, including in terms of business and the economy.  In the event that Venezuelan oil exports are sanctioned by the US, refineries in that country will be seeking supply to meet the needs of their operations.  Canadian crude oil could fill this gap, however, meeting such opportunities successfully requires more than just identifying solutions at a high level.  Logistical challenges and limitations have been in the news for some time and relate to the need for Canada to continue to focus on developing a global trade strategy for oil.  This approach raises the likelihood that opportunities could be successfully met as they arise; it is also simply good business.

The advancement of riderless cars, one step closer to being approved for regular road use, reminds us that the future is now.  Although there is still additional work to do in terms of testing and refinement, the practical use of autonomous vehicles represents tremendous change for many, including car manufacturers, insurers, companies that utilize vehicles and drivers, and consumers.  Are they ready?  I expect that many are facing the need to work quickly to keep up with the pace of these exciting developments.

And so, 2019 begins, with what should be an interesting year.  Special thanks to CBC News Network for the on-air mention of my new book, Defusing the Family Business Time BombI sincerely appreciate it!

 

Escaping the Demographic Trap

Many family business leaders have the expectation that their company will eventually be passed to the next generation and maybe even to the one after that.  Perhaps this is why they established the company in the first place: to provide for the family’s financial needs over the long term, building wealth and security in the process.  Having possession and control of this type of “economic engine” brings with it the power of options and the benefits that are associated with not having to rely on others to earn an income.  Achieving longevity isn’t so easy, however, as research indicates that successful passage of a company to future generations is not typical.

The current environment in which we live is characterized by a number of important realities that impact long term business survival: many companies are led by aging business leaders, most do not have a formal succession plan, and the next generation is getting restless.  Couple this with a backdrop of significant disruption, in terms of technological, economic, political, and social factors and it’s easy to recognize that these days are like no other.

Let’s briefly consider what the current demographic environment means, in the context of family businesses:

  • Business leaders are remaining engaged with their companies for a longer period of time, as traditional retirement has become less of a rite of passage and people are more inclined to lead an active life that includes work.  The other side of this trend includes realities such as needing to work longer to support lifestyle expenditures and indecision around how a company should be transitioned (and family squabbling doesn’t help).
  • Potential successors are seeing little advancement in terms of succession, resulting in the decision to consider other options, beyond that of the family business.  As successors themselves get older, this is understandable, however, it can blindside a founder, leaving them to wonder how their “succession plan” could have gotten away.  This could have serious implications for the future of a company, leaving the business leader to revisit the issue of succession entirely or little in the way of viable transition options.
  • The number of potential successors is limited, in that the next leader is only a realistic option if they have the necessary skills, interest, and capital to undertake a transaction.  This group is further reduced by family members who have moved on to pursue other opportunities, in a demographic group that is already smaller than the generations ahead of it.

When it comes to demographics, you can run, but you can’t hide.  At some point in time, all companies will require new leadership if they are to continue to operate, and the extent to which this can be done successfully is largely dependent on one thing: thoughtful and formal transition planning.  As simple as it might sound, research has shown that the vast majority of business leaders do not do this.

Learn more about the implications of demographics and how you can avoid the “trap” by reading Defusing the Family Business Time Bomb.   Use promo code familybusiness to save on the price of multiple copies, and pay no taxes and shipping costs on all purchases of our book, through January 27, 2019!  The future of your company and family’s income stream will thank you for it.

BOOK RELEASE: Defusing the Family Business Time Bomb

I’m pleased to announce the launch of my new book, Defusing the Family Business Time Bomb!  This isn’t just another family business book.  Why?  Because family businesses are facing the most explosive challenge in a generation.

The reason?  While it is quite normal for a typical family business to be inundated with challenge and change, seldom have so many potential threats been evident:

  • Demographic factors.  The majority of aging Baby Boomer business owners do not have a succession plan and don’t appreciate the reality that there are a limited number of potential successors.
  • Disruption of key industries.  New, complex business models and rapid digital/technological advancement have the potential to reduce valuations and make transition to new ownership either irrelevant or much more costly.
  • Dramatic change in the global economy.  Makes strategic planning difficult, increases competition, and could escalate the cost of doing business, thereby shrinking profit margins.
  • Uncertain financial times.  Complex tax changes, restrictions to family income sprinkling, and a new clawback of the small business deduction all impact profitability, investment opportunities, and access to capital. This challenge could be especially difficult for young entrepreneurs or successors.
  • Typical family business problems.  The conflict, apathy, sudden or emerging illness, or control issues can affect relationships, decision-making and, ultimately, the health of both entities: the family and the company.

Business leaders are under siege, but do they know it?  These issues are significant and very much present in the current business environment, with additional evolution and challenges occurring with each day that passes.

Whether you are a long-time business owner getting ready to transition out or a new entrant to the “gig economy”, poised to grow and expand, you will appreciate this book for its contemporary and practical advice. It brings a common-sense approach to the challenges associated with building a company that has the potential to be sold to someone else in the future. This from two experienced authors and business leaders who have helped the owners, executives, investors, and professional advisors with whom they work to prepare for the most explosive challenge in a generation: the retirement of the Baby Boomers and transition of their companies to a new guard, who face pitfalls and opportunities of their own.

Join me and Evelyn Jacks on this important journey for your business and your family.  Order your copy here!