A Well Planned Retirement
Outside England's Bristol Zoo there is a parking lot for 150 cars and 8 buses. For 25 years, its parking fees were managed by a very pleasant attendant. The fees were £1.40 for cars, and £7.00 for buses.
Then, one day, after 25 solid years of never missing a day of work, he just didn't show up; so the Zoo management called the City Council and asked it to send them another parking agent.
The Council did some research and replied that the parking lot was the Zoo's own responsibility.
The Zoo advised the Council that the attendant was a city employee.
The City Council responded that the lot attendant had never been on the Council payroll.
Meanwhile, sitting in his villa somewhere on the coast of Spain or France or Italy... is a man who'd apparently had a ticket machine installed completely on his own, and then, had simply begun to show up every day to collect and keep the parking fees, estimated at about £560 per day... for 25 years.
Assuming 7 days a week, this amounts to just over 7 million pounds.... and no one even knows his name.
murray 16-Feb-2011 04:47 PM
Sorry to say but this is an urban myth. A nice story and very entrepreneurial but completely false. Please see:
http://www.snopes.com/crime/clever/carpark.asp
Kristian Reiss 18-Feb-2011 08:54 AM
Thanks for reading our blog, and for your feedback Murray. We were aware that this story is an urban myth, but it tickled our fancy anyway!
Succession Planning, Handing Over Family Business
Last week we discussed how important it is for every business owner to have an exit strategy, even (especially) those just starting out. If you have given thought to how and when you plan to exit the business, this will guide you in your day to day decision making and make the entire process, when the time does come, far less stressful.
Succession planning is the term we use to describe handing the business over to someone else as a going concern. In the corporate world, succession planning involves identifying suitable candidates to take over key positions within an organisation – the CEO or general manager roles for example. Whilst this is important to ensure continuity, these are just salaried positions. In SME businesses, succession planning often involves not just the transfer of management responsabilities, but often busines ownership. As you can see, in this case, the stakes are much higher. The prospect of handing ‘your baby’ over to someone else, even a family member, is daunting, and the process should be afforded sufficient time and thought to ensure success. The alternative is far less attractive.
Here are a few key points to consider:
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Consider ALL the options to make sure you find the best solution for all stakeholders. Harsh as it may sound, it may be better to sell a successful business and split the proceeds amongst the family that to pass it on to a reluctant heir who is unable or unwilling to commit the same time and resources you do to its success and who may lack the passion or expertise to ensure its ongoing success. In this situation, if the business fails, everyone missess out.
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Discuss your plans with your family and other key stakeholders. This is the ‘reality checking’ phase. Test all your assumptions - what your son said a few years ago about how much he enjoyed the business may no longer hold true, or he might enjoy the technical aspects but dread the managerial responsability.
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Once a plan has been developed, tested and approved, make it happen. Give your successor increased responsabilities and any additional training or experience they will need to do the job well. This may involved some time outside the business, almost like a ‘gap year’. This fresh perspective may be just what your business needs.
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Do it right. If you are serious about succession planning, do it properly. This involves completing the appropriate legal paperwork to formally hand over ownership. Too many businesses operate ‘in limbo’ with a transfer happening on the ground but not ‘in deed’. This undermines commitment and sends mixed messages.
Businesses have successfully been handed from generation to generation over the years, with each new manager making their own contribution to the businesses success. Those working in the family business get to see firsthand the committment required for success and learn their skills from the ground up. A successful business with strong systems in place and a bright future is one of the greatest gifts parents can give to their children, but the process requires careful execution to succeed.
Richard Everson
Small Fish Business Coaching Murrumbateman
www.smallfish.com.au
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Exit Strategies and Succession Planning
As part of our initial coaching session, we ask business owners if they have an exit strategy. “But I’ve only just started the business, why would I need an exit strategy?” is a common response. So is “They’ll carry me out of here in a box.” Well, macabre as it may sound, that’s an exit strategy of sorts...
Every business needs an exit strategy, it should be part of the initial planning process. How you plan to leave the business will have a huge impact on how you design and build it. If you intend to take a struggling business, build it up and sell it for a profit in 2 – 5 years, you will probably do things a little differently than if your plan was to focus on creating a business that you can pass on to your children.
Here are a few possible scenarios:
‘Flipping the business’ - A term borrowed from the real estate world, you flip a business when you buy it for a low price, whip it into shape and sell for a profit.
‘The business is my superannuation policy’ – A similar scenario to ‘flipping’ except the owner holds the business for a number of years, drawing a salary, before selling and using the proceeds to fund their retirement.
‘Cash cow’ – describes the type of business that has little capital value and a low ‘goodwill’ component, the owner plans to extract as much cash flow from the business as possible with little prospect of a high resale value. A typical ‘cash cow’ business may operate from leased premises, offer professional services and be heavily reliant on the experience and expertise of the business owner.
‘World Class Business’ – This is the business we should all be aiming to build. It is founded on a strong business plan, has robust systems and procedures and functions without the need for the owner to be ‘on the tools’ day after day. This well managed business delivers strong cash flow and, because the system is not reliant on the expertise of the owner to function effectively, it is attractive to buyers.
When discussing exit strategies, it is important to consider succession planning. Succession planning occurs when the leadership of a business transfers from one person to another – commonly from one generation of a family to the next, but the term also applies when ownership of a business changes hands. We’ll look at succession planning in more detail in next week’s blog.
Give us a call, we’d love to discuss an appropriate exit strategy for your business.
Richard Everson
Small Fish Business Coaching Murrumbateman
www.smallfish.com.au
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