Are you planning to retire? Worried about which route to take? Let Matt handle your affairs.

There will be a point where you will need services from a family office. Luckily, Matt, who has set up a virtual family office, can be your financial quarterback. Whether you have years of business success or are just starting, Matt will always be there to assist you. 

The five-step process

My five-step process acts as the 411 or 911 for the families. In the initial stage, I help the family create a vision. After a detailed business analysis, I formulate a roadmap, implement and monitor it. As soon as the family hits an obstacle, I work on the pivot. In this way, the family lands back on the “vision track”. 

The knotty question 

The most crucial question connected to the first step of the process is “what do you want your life and business to look like”. The irony is that most business owners, such as yourself, might struggle while defining the vision and the way forward. What happens to their business in the long term? What happens when they want to retire or transition their business? This is when the overwhelming sense of panic strikes. They start thinking to themselves that all this time, they have been trapped within the bubble of their life’s single most significant investment. They are overwhelmed by the situation. As a result they start scanning their human capital. Who are the key family members or employees that are interested or can run the business? 

“Your life affects your business, and your business affects your life.”

Relentless animosity 

Since the business owners sometimes do not stay mindful enough to discuss the future human capital, chaos takes over. There is a constant power-succession tussle between the family members and the key employees. 

Enters Matt and his virtual family office!

I am primarily seen in the role of “conversation striker”. For instance, when an automotive business owner seeks help from High Lift Financial, the first step will be to initiate “the discussion”. Everybody will have to sit down and have to exchange discourse on what they see as the future of their company. In simple words, take a step back and redefine what each party wants. The key is not to discount the human capital. 

“The more we can build up that human capital, the more prosperous for everybody the business and the family life will be”

Getting down to the business-life brass tacks

Step 1. Long-term positioning

The biggest issue for most entrepreneurs is the unclear long-term goals due to their short-sighted vision and mindset. Some people might want to retire, while others want their business to pass down to their successors. These can be the immediate family members or key employees. 

Once we hit a specific age, many entrepreneurs want to limit their responsibilities and take on the role part-time. Hiring a consultant that looks after all the operations is another highly sought solution. The owners just filter in and out at their convenience. To encapsulate this idea, the client is asked to define their job and role in the future very clearly. 

Step 2. What they intend to do meanwhile

Now that it is clear what role the client intends to opt for, it is time to decide what they want to do. Let’s say they have decided to retire or go part-time. So what do they want to do with the time they have freed up? Sometimes people already have a plan in mind. Usually, people are so consumed with their jobs and responsibilities that they have not found the time to think about it. 

This is the phase where the planning happens. Some of them want to relocate to a place they have always wanted to. Others decide to contribute to worthwhile causes. Everything here depends highly on the decision made in the step earlier, and it is spelt out to the owner as well as the succeeding party. 

Step 3. Identification of conflicts

Before the plan is enacted, a vital process is the identification of possible challenges. The client and the stakeholders are summoned to help make the transition smooth in the future. A few common problems among families include the children not liking the parents being highly involved.  Parents tend to get controlling at times which hinders the growth of the business and can cause a conflict of interests. 

Next, some ground rules and guidelines are established along with the consequences regarding breach of contract. It is ensured that all the parties are on the same page and that they agree with the policy set out for them. The role of the family business here is to encourage conversations and opening up; however, dictating the vision is not allowed. 

Uninterested Kids – The exit plan 

If the children or family are unwilling or uninterested in taking over the business, an exit plan is devised with the suggestions of all stakeholders. This can take up to several meetings to reach a consensus. 

The inclusive approach

There can be a situation where one of the children might be ecstatic to take over the business while the other one might have plans of his own. What to do then? How can an equitable decision be reached?  Firstly, the numbers at the tax ramifications have to be addressed at times, but most importantly, A vision is to create keeping everybody’s interests in mind

The meeting process

A family meeting is summoned to include all the direct and indirect stakeholders of the business. This can be immediate family, siblings, nieces and nephews, key employees and others. This meeting is usually set out of the work environment and in a relaxed setting. It is to prevent intimidation and encourage participation among the members of the meetings. The objective is to give them the space to be able to think out of the box. 

The meeting space  

In order for people to open up, they have to step out of their regular environment. Their minds open up, and all of the brain juices start to flow. However, the key is not to change the complete setting, but to take people away from the usual grind to a place where they can articulate their vision. These can be:

• Homes
• Retreat centers 
• Lakehouse 
• Vacation spots 

The question of “succession” 

This part questions the time requirement necessary to start the planning process. How far in advance should this process be initiated for the best possible results? Can it be successfully done on very short notice? Well, the answer depends entirely on the roles and ages of the involved parties. Of course, it is wise to come sooner than later, but the succession plan can be devised on short notice given that the successors are not extremely young and have some experience and knowledge about the business. 

Matt’s advise 

One meeting can never suffice. Regular family meetings are called to ensure every aspect of the business and personal life is covered for formulating a succession plan. Depending on the family dynamics, meetings can be scheduled on an annual, semiannual, and quarterly basis.  

The two crucial objectives here include ensuring the client and the successors are on the right track and have not lost sight of the vision and, secondly, addressing any changes or recent developments that have been made, for example, a divorce, babies, etc. 

One key piece of advice for everybody is never to take these financial matters into your own hands. Consider the involvement of a trusted professional advisor a must. Running your own meetings to draw up a succession plan is usually a recipe for disaster. 

Disclaimer

The information compiled and posted here solely represents the opinions and views of the guest. It might not necessarily be similar to the opinions and views of High Lift Financial. The availability of this content only serves educational and informational purposes. It is in no way a substitute for tax or legal advice or professional investment. 

Always make sure to consult your financial advisor with any queries related to personal or business planning. DiFrancesco Financial Concierge, LLC. d/b/a HighLift Financial is a Registered Investment Advisor registered with the State of Pennsylvania and subject to the State of Pennsylvania’s regulatory oversight.