Estate Planning Council Dinner2

Slide1: 

A Presentation By “Preserving an Endangered Species… Gordon Wusyk Of Predictable Futures Inc. - The Business Family Centre

If you think…: 

If you think… Are “OPTIONAL” EVENTS You’re in the WRONG room!! Retirement & Death

Slide3: 

FAMILY BUSINESS SUCCESSION PLANNING . . . “70% of all Family Businesses never make it to the second generation And 90% fail to reach the third.”

Family Enterprise in Canada: 

Family Enterprise in Canada Canada’s family businesses employ 4.7 million full-time and 1.3 million part-time workers Total annual sales of Canada family-owned businesses: $1.3 trillion Most family enterprises are highly dependent on their current leader Major leadership change in Canadian family businesses 27% of family business leaders will retire in next 5 years 29% will retire in 6-10 years 22% will retire in 11-15 years Most have no contingency plan covering the death or the disability of their leader Only 29% have a succession plan Unlike US counter part, Canadian family business owners see the generation of wealth as the primary role for the business. Keeping business in the family is a lower priority Source: BDO Dunwoody/ Compass Report on Canadian Family Business (2003 & Survey of Canadian Family-owned Business by Deloitte& Touche for Tax Education and Research at the University of Waterloo (1999)

From ‘FAD’ to ‘FIELD’ of study: 

From ‘FAD’ to ‘FIELD’ of study Research over the last 25 years provides new understanding of family business & their issues Growing number of family business advisors coming from a variety of disciplines Family Firm Institute: Founder in 1983 by 22 professionals, now has 1200 members Certification program now available for professionals Clients are more knowledgeable and sophisticated than 10 years ago: Families have access to many different educational opportunities Families have access to many networks: PFI Family Business Network (FBN) CAFÉ BFF ABFI CEFE FFI Clients now expect advisors to be well informed Source: CALU May 2005 – Evolution of the Family Business Field

All about PERSPECTIVE: 

All about PERSPECTIVE

The Interdependence of our Family,our Ownership and our Business Entities: 

The Interdependence of our Family, our Ownership and our Business Entities Ownership Business Family

Perspective of Each Entity: 

Perspective of Each Entity Needs / Priorities: Strategic Planning Market Value Compensation Results (targets) Profits (retained earnings) Competent, Competitive Staff Systems for Management & Control Marketing Quality Product/Service Accountability Regular Reviews Solvency Cash Flows Entrepreneurial Perspectives Fast, Efficient Decisions Business

Family Perspective: 

Family Perspective Needs / Priorities: Nurturing Communications Affection and Love Equality of Affection Individual Needs Personal Development Family

Ownership Perspective: 

Ownership Perspective Needs / Priorities: Return on Investment Return of Investment Equity Growth Stewardship of Assets Reputation of Owners Diligent Management Timely Reporting Responsible Board Selection Ownership

Neglect one…: 

Neglect one… and risk destroying the whole system Ownership Business Family

FAMILY BUSINESS SUCCESSION PLANNING A “Multi-Dimensional” Process: 

FAMILY BUSINESS SUCCESSION PLANNING A “Multi-Dimensional” Process Family/Personal Relationships Protection From Family Law Wealth Management “Game Plan” Legal Documentation Creditor Protection Retirement Strategies “Death Tax” Liabilities Estate Equalization Tax Planning/ Minimization Your Family Your Business Charitable Gifting

IMPORTANT PLANNING DECISIONS: 

IMPORTANT PLANNING DECISIONS Are Often Made One At A Time … But Even A Series Of What Seem To Be Quite Reasonable Decisions, Taken In Isolation, Can Produce A Result That Is Unacceptable When They Are Combined …

Slide14: 

What You Wanted

Slide15: 

What You Got

The Enigma of the Business Owner: 

The Enigma of the Business Owner 1) The Owner ROI Growth Income Exit strategy 2) The Aging Male/Female Physiologically Psychologically 3) The Best Employee First in, last out 4) The Manager Hires Fires Organizes The Four Part Personality*

The 7 F’s of Balance: 

The 7 F’s of Balance Family Fitness Friends Finances Firm Faith Fun

The Natural Conflict…: 

The Natural Conflict… The Family Goals: Support Family members Rules: Informal expectations Evaluation: Rewards for who you are – unconditional Succession: Caused by death, divorce or illness Relations: Deeply personal, of primary importance Authority: Based on family position of seniority The Business Goals: Profits, revenues, efficiency & Growth Rules: Written & Formal w/rewards & punishment Evaluation: Support conditional on performance Succession: Retirement, promotion or departure Relations: Semi Personal or impersonal, of secondary importance Authority: Based on formal position in the organization’s hierarchy Conflict is healthy… Unresolved conflict is not

Roots/ Principles: 

Roots/ Principles M Make Things Happen A Achieve Significance (vs. Success) X X out the Negatives I Internalize Right Principles M March to a Mission I Integrate all of Life Z Zero in on Caring for People E Energize the INNER Life R Re-align Rigorously S Stay the Course

If you don’t have PROCESS: 

If you don’t have PROCESS you have a PROBLEM

The Process: 

The Process 1. Clarification of founder’s dreams of the future Clarify family member’s personal vision – for business & at a personal level 3. Aligning the business strategically to support family & founder’s dreams and goals 4. Prepare the successors 5. Choosing The New Leader 6. Choosing and Training the New Owners 7. Building the Legacy – review of estate plan

A Game Plan..: 

A Game Plan.. Or it’s GAME OVER

Role of the Family Business Consultant: 

Ownership/Governance System Lawyers Accountants Estate Planners Business Systems Business/OD Consultants Family Systems Family Therapists Role of the Family Business Consultant Family Business Consultants

Slide24: 

JAW BONE BACK BONE WISH BONE

How to Contact PFI: 

How to Contact PFI Predictable Futures Inc The Business Centre Suite 1211 10104 103 Ave Edmonton, AB T5J 0H8 www.predictablefutures.com solutions@predictablefutures.com