Dispelling the Family-Owned Business Retirement Myth
How to Improve, Sustain and Transition Your Business To Achieve More Wealth, A Better Lifestyle and the Retirement of Your Dreams
With more than 65 million baby boomers heading toward retirement, many family-owned business owners who hope to sell their business or seamlessly transition it to extended family or employees, then live comfortably off the bounty are in for a surprise. For starters, a simultaneous mass exodus of business owners from their life’s work creates a tidal wave of real estate in an environment with considerably less buyers than sellers. Compound this with the fact that family-owned businesses often require heavy care and feeding in the form of hands-on owner involvement, or on-going infusions of working capital to keep them running, and it’s not unrealistic to assume that the that the retirement they hoped for is just another pipe dream. But it doesn’t have to be.
Today’s business owners are modern-day pioneers. With vision, tenacity, and a willingness to roll up their sleeves and work 12 hours a day or more, they deserve the opportunity to be rewarded for their admirable qualities, years of hard work – and for creating more jobs across the country than all of the large corporations combined.
While most business guru’s talk about the importance and critical value of establishing streamlined operations, cutting costs and improving operations – there is little attention given to how family-owned business owners can more strategically work within their businesses. In fact, there are a host of misconceptions that small business owners operate under which hold them back – reducing the overall value of their business, creating owner burnout, and lessening opportunities for a successful retirement that will allow them to reap the benefits of the empires they have built.
The good news is that once this flawed thinking is dispelled and a more strategic approach is embraced, family-owned business owners are empowered to achieve unsurpassed success. Because of their smaller size, nimbleness and closely connected operations they have the opportunity to quadruple in size, achieve business self-sufficiency and upgrade the market value of their enterprise in ways that will not only make their company stand out and shine from a succession standpoint, but provide them with more options and the kind of financial rewards that will last for generations.
One of the major misconceptions that family-owned business owners operate under is the idea that they must focus solely on the revenue stream. The reality is that chasing revenue does very little to create or grow a business. Owners need to redirect their thinking from cash flow to the customer. Cash flow is short term, reactionary, not strategic and does not provide long-term income. Customers however, present the opportunity to expand the revenue stream, improve products and services and leverage new sales opportunities. Success comes from aiming higher than the bottom line.
Another myth that family-owned business owners fall prey to is the idea that their business is their job. They approach their daily tasks with a dated work ethic and a focus on cost cutting, improving the efficiencies of current systems and leading from the front. They leave no time for themselves or others to consider alternative ways of doing business or think about how employee talents can be applied to improve business growth and profitability. It’s the difference between working from instinct verses working with insight. When owners embrace a more insightful, strategic approach, they begin to see the “big picture” which, with the application of best-practice business processes and a high-performing management team, can help them achieve freedom and new heights of success.
Still another mistaken idea often embraced by family-owned business owners is the belief that their business is an extension of themselves. In spite of the fact that most family-owned businesses are established to create a livelihood for the business owner and their family, the real purpose of any business is to serve the customer. Business owners who turn their sights away from themselves and what they “think” they’ve created to study where sales are being made have the opportunity to evaluate and experience their business in the same way their customer does. They can see shifts or developing trends in the market and better meet them. A good example of this is evidenced in the grocery store industry. Recently, major grocery store chains have expanded their role from being simply providers of raw or pre-packaged foods into full-service delis with the ability for customers to purchase meals. This new revenue model, unforeseen a mere 10 years ago and now common practice within the industry, was driven purely by customer need.
Another myth that family owned business owners typically operate under is the assumption that they should rely on their accountant or banker as the sole source for business advice, strategy and planning. The fact that both of these experts concentrate on the revenue stream, and take a backwards rather than forward view of the business leaves business owners adrift in critical areas of marketing, leadership, management, process and system improvements, and the like. Lack of plans, strategy and competency in these key areas are the single most important contributor to their inability to smoothly transition out of the daily operations of their business and into a more comfortable lifestyle.
Moving beyond myths and flawed philosophies requires family-owned business owners to think more strategically about their business, engage the right resources and realign their business goals and operations with their personal end game. With a financially sound, process-based approach that focuses on the customer and the guidance of a professional who can help them develop and institute plans to align their retirement dreams with improved company processes, structures and performance, the family- owned business owner can indeed have their cake and eat it too.