For the May 27, 2010 Family Business Radio program, hosts Pat Romboletti and Meredith Moore welcomed commercial banker Brad Beisbier, Sr, Vice President RBC and Cleve Hill, Attorney at Law with the Bettis Law Group.
Most banking relationships are based on the need for capital and cash management needs. But as Brad said, your banker can actually be one of your trusted advisors and actually a business partner if you develop the relationship strategically. For instance, quarterly reviews with your banker are a very useful tool for you as a business owner because it is easy to lose sight of long-term goals when you are focused on the day-to-day. Your banker can give you their perspective from the outside looking in. Quarterly meetings can also be used to put plans in place that help you better take advantage of opportunities when they arise. Pre-emptive actions that Brad suggested: be as transparent as possible by sharing financial statements and tax returns.
Additionally, Brad said to consider including more than just the founder at the table when the banker is there, especially invite all potential players in the company’s succession plan. In this way, relationships develop all the way around.
This opened the door for a great discussion on the importance of getting out from under the day-to-day details to develop long-range goals. Cleve noted that in working with his clients, he seeks to put together a full compliment of trusted advisors who act as an informal board so that you can gain valuable third-party perspective and input.
From an attorney’s point of view, Cleve pointed out that in putting together your team of advisors, particularly as relates to succession planning, your team of advisors should be tuned into your specific needs. “The advisors that most often fail are the ones who come in with a pre-packaged plan and say this is how it has to work,” he said. Rarely are answers arrived at in one meeting. It is most often an in-depth conversation that takes place over time, he said.
In case you need incentive to do your estate/succession planning, Cleve shared a worst case scenario from real life. He shared that a business owner died suddenly with no will, no trust, no planning, children from two marriages and left the business with substantial debt. In the aftermath, the family disintegrated and untold amounts of money have been spent on litigation and the continuation of the business is in jeopardy. It is a textbook case of what you don’t want to happen.
So—where to start with estate and succession planning? Among Brad and Cleve’s suggestion are life insurance, buy/sell agreements and developing key employees outside the family as leaders in waiting. Cleve said, “These are moving pieces, depending on what can be afforded, what can be agreed upon. Do a cost/benefit analysis. Also be mindful of the psychological piece—and answer the question “what can we live with?” Cleve’s insight on Georgia law was especially enlightening and not what you might have expected.
This discussion provided excellent specific suggestions that any business owner can use immediately so don’t hesitate to download the entire discussion. You will receive loads of practical information for your family owned business on these complex, but very necessary issues.