Page 30 - Lighting Magazine December 2018

NExt in line
DON’T KNOW WHERE TO START?
If you’re interested in talking with a professional about succession planning, but don’t know where to begin, here are some questions to get the ball rolling:
3⁄4 How do I choose a successor?
3⁄4 How much is my business worth?
3⁄4 How do I sell my business to a private equity rm or another
group?
3⁄4 How do I get paid if I merge my business?
3⁄4 How do I get some ownership in others’ hands?
3⁄4 What are the tax implications of everything I am thinking about
pu ing into place?
3⁄4 If I have a board of directors, what role do they play in the suc- cession planning process?
3⁄4 If I have a succession plan in place, is it working at every level of the company?
“It’s a tough situation when you’ve got family members who have no interest in the business or if siblings aren’t on the same page.”
—Jen Schmi
Similarly, Jen Schmi , Vice President and Gen- eral Manager at so ware and services provider Schmi Pro Tools, Inc. in St. Louis, understands all about working in a family-owned business. She works alongside her father, Rich Schmi , Executive Vice President. “One of my favorite columns that we wrote this year was about succession planning,” she says. “We got such a great response.”
Schmi highlights several potential hurdles if you don’t have a plan or a great team of professionals, such as: What is to take place upon succession? What happens when children inherit shares of stock by default when there is no estate plan in place? What happens when spouses inherit shares or in cases of divorce, or situations where there are com- pany ESOPs (Employee Stock Ownership Plans)?
“Family involvement can take on many forms,” Schmi notes. “It’s a tough situation when you’ve got family members who have no interest in the business or if siblings aren’t on the same page. And of course, it’s very di cult to run a business if fam- ily members aren’t involved in the decision-making process.”
The Schmi s have been involved with almost ev- ery potential situation possible during their years as business consultants — and it is especially challeng- ing when it comes to succession planning. “What has been the mantra for both [my father and I] is that family comes rst. We don’t let the company or
the direction we are taking the company interfere with family,” she a rms.
THe LawS oF SucceSSIon
Dan Beederman, a partner at Schoenberg Finkel Newman & Rosenberg, LLC in Chicago, agrees with Fleischer’s timing strategy. He deals with indepen- dent sales reps and associations such as AIMR, REPS, ERA, and others in his practice. Succession Planning is one of his focuses.
“Succession planning is important because the streams of channel are interrelated, and if there is an interruption in any aspect of the chain, it a ects everyone,” Beederman states. “You shouldn’t wait until you are ready to retire. Start thinking about succession planning much earlier when you’re still active. Start looking around you and identifying some key people who might be good successors.”
For those not in a family-owned business, identi- fying key employees in your organization who could be successors is critical. For the sake of retention, Beederman suggests taking those employees aside and communicating their value. In some cases, giv- ing small shares of the company to key people along the way is a sign of commitment.
Beederman points out, however, that if stock is issued to employees, it should be done as small amounts of stock over the years until they nally own the percentage of the company they agreed upon.
“Incentivize people to stick around; you don’t want to get them hit with a large tax bill when they only own 5 percent of the company.” This method also helps you stay in control.
Another option in succession planning when fam- ily is not involved is a merger. This can sometimes mean having one of your manufacturers or channel partners merge with your company. “This is a much tougher deal when it’s a merger between agencies,” Beederman advises.
Whatever form succession planning takes on within your business, the keys to the process are summed up perfectly succinctly in those two words:
3⁄4 Succession — ensuring that your business has the tools, the people, and the plan in place so that it can continue to grow and succeed a er you are gone.
3⁄4 Planning — good plans don’t just fall into place. They require thought, time, experienced professionals, and lots of communication for success to be the end result. 
26 enLIGHTenment magazine | december 2018
www.enlightenmentmag.com