As a successful entrepreneur, it’s natural for you to solve some problems by thinking outside of the box. That ability to put disparate elements together, often in ways others would not, is known as inclusive thinking. Too many owners, however, look at the transition of their companies to successors from only one perspective. The purpose of this article is to show you how the power of inclusive thinking works in succession planning.
During uncertain times, it can be tempting to assume that the business transition you’ve dreamed of either must be put on hold or just can’t happen. For example, given high interest rates, you may assume that your successors will not be able to take on the debt necessary to pay you what you want for your company. Using inclusive thinking, you might realize that your successors could purchase segments of your business over time rather than at once, if doing so meets your objectives and maintains your important relationships.
Let’s look at an example of how the power of inclusive thinking works in succession planning (with details changed to protect the anonymity of my clients).
Thanks to years of hard work, a husband-wife team had built a successful nursery business. As they began to think about transitioning to the next phase of their lives, one of their objectives was to keep their business thriving and prosperous. The other was to keep their family intact.
The couple had two sons, both of whom had expressed interest in taking over the business. They were extremely concerned that if they chose one son over the other, family ties would be irreparably damaged. They couldn’t see a solution but weren’t willing to give up their Next Adventure. That’s when I met them.
I quickly learned that two large greenhouses produced most of the nursery’s plants. When I first suggested the idea of separating the greenhouses and gifting one to each son, the parents had several objections and questions. “If we split the company in two, each company will need its own computer system, bank account, and contracts with vendors! Since we’ve always attributed our administrative overhead to both greenhouses, will these expenses double?”
After addressing their concerns and answering their questions, my clients began to envision an exciting new path to transitioning out of their company in a way that achieved their two primary objectives. The cost of separating the two greenhouses was minimal compared to the price their family would pay if the parents chose one son over the other to run the company. As a bonus, splitting the company enabled the parents to leave each son a substantial legacy. By using inclusive thinking, these owners recognized that there was another path that could achieve their transition objectives.
Inclusive thinking only works after you identify your most important objectives because your objectives set your transition destination. Once you know your destination, inclusive thinking helps you—and your advisors—see paths that can take you where you want to go while overcoming or avoiding financial, tax and other obstacles that may arise on your transition journey. If, however, you use inclusive thinking before you establish your transition objectives, you are like a traveler without a compass, map, or destination.
We love working with out-of-the box thinkers and recommend that you look for that quality in your transition advisors.
Connect with our founder, Elizabeth Ledoux, on LinkedIn.
Elizabeth Ledoux is a co-author of the award-winning It’s A Journey: The MUST-HAVE Roadmap to Successful Succession Planning, as well as Accelerate Your Entrepreneurial Flight and Understanding the Growth of the Entrepreneur. She frequently speaks to organizations and business owners about challenges and opportunities in private and family business transitions, business and individual growth, and the business succession journey.