Planning for a successful future often takes years. And even the most forward-thinking plans often encounter unexpected obstacles that can add more time to achieving your goals—perhaps more time than you’re comfortable with. How can you minimize the time you need to achieve success while still maintaining control of a fulfilling future on your terms?
Let’s look at a fictional but representative account of how a business owner successfully moved toward her business goals on her timeline and how you can implement the same concepts to overcome time crunches.
Approaching the river
Dr. Bernice Stanopolis was a successful bariatric surgeon. Demand for her skills had allowed her to grow her practice by leaps and bounds, but it also forced her patients onto an ever-expanding waiting list for her services.
Bernice realized that she had two obstacles to achieving success on her terms:
- She needed more help so she could focus on the hardest-to-manage cases.
- She needed to assure that her practice could thrive if something were to happen to her.
As a cancer survivor with diabetes, Bernice was well aware of the importance of having a backup plan. She refused to let unexpected challenges destroy all the hard work she’d done to build her practice over the past 20 years, but she wasn’t sure of the best route to protect her business.
She shared her concerns with her longtime business consultant and exit planner Craig Brunell.
“Ideally, I want my junior partners to take on the glut of my cases so I can focus on the most complex ones,” Bernice said. “But that could take years, and I know I can’t do this forever.”
Building the bridge
Bernice had been planning to retire at 66, six years from now, but she didn’t want to leave her patients without a trusted surgeon.
“It’s a good idea for you to focus on the most difficult cases while your colleagues work on more routine cases, both in terms of serving your patients and working toward financial independence,” Craig told her. “Have you considered bringing on a more experienced surgeon to help teach your junior partners?”
“I have, and I have a great relationship with a surgeon who would be interested, but I don’t want my partners to think I’m leapfrogging them,” Bernice said. “I worry that they’ll think I don’t trust them, and then I might lose them.”
“We can address that with incentive plans to show your junior partners that you’re dedicated to them eventually taking over,” Craig said. “We can also create a practice continuity plan that outlines the expectations for the incoming surgeon, which will be to train your junior partners and stand in as an interim manager should something happen to you.”
Crossing the river
Bernice, Craig, and the rest of her advisor team took three important steps for successful business owners planning for their successful futures:
- Determining how much she needed to attain financial security
- Creating detailed, written incentive plans for her junior partners that provided ambitious goals to meet, allowing them to take over the business when Bernice retired
- Drawing up a practice continuation plan, also called a business continuity plan, to give guidance to her junior partners and the experienced surgeon about how to run the business if something were to happen to Bernice before she retired
As a result, her junior partners took on most of the practice’s routine work under the tutelage of the more experienced surgeon. They also assisted Bernice with more complex cases to prepare for her eventual retirement.
This allowed Bernice to maximize her practice’s profitability, reduce her waiting list, and work toward achieving financial security, all while creating a backstop to protect her practice against her health issues.
After four years of implementing these plans, Bernice’s health took a turn for the worse and forced her to retire earlier than she had expected. However, though she could no longer perform complex surgeries, she was still able to advise her junior partners and run the day-to-day operations of her practice.
Fortunately, thanks to her planning foresight, she still managed to achieve financial security, provide the mentoring her junior partners needed, and eventually transfer her practice to her junior partners.
Be prepared
Even though Bernice’s plan took several unexpected turns, she still stayed on a path that allowed her to leave her business on her terms.
As a business owner, it may seem impossible to prepare for every unexpected event. However, by understanding your goals, examining your risk factors, and determining what a successful future means for you, you and your advisors can work together to build the bridge you need. The foundation to these steps is always determining how much money you need to achieve financial independence when you eventually leave your business.
A business continuity plan should provide a road map to keep your business running well if you ever have to leave it unexpectedly.
Finally, assuring that your key employees are locked into the business is crucial. Bernice recognized that and took action to protect her business and financial future, while clarifying plans to her junior partners. With clear communication and written incentives, she managed to quell any concerns about their future roles as full partners in the practice.
We strive to help business owners identify and prioritize their objectives with respect to their businesses, their employees, and their families. If you have questions on this topic, we can help with more information or a referral to another experienced professional. Please feel free to contact us at your convenience.
Imagine a world where your financial advisor, attorney, accountant, insurance specialist, and property/casualty advisor all worked together, like a board of directors on your behalf. This is the type of Collaborative Advisory Team approach we take in our practice. For many driven entrepreneurs, executives, and high-net-worth individuals, a Collaborative Advisory Team of professionals is the most effective and efficient way to achieve your optimal financial world. At Moneta, we’re reinventing the way you experience wealth management.
The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
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Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.
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