Digital Dealer - February 2020 - 11

your eventual retirement or death, let's
explore five common misconceptions.

Misconception # 1 - I'm All Taken
Care Of
The three general beliefs we hear from
dealers are that you have everything all
taken care of, that your estate and exit
strategy are in order, and that your attorney and CPA have you covered. In these
areas you may have ultimate confidence
you are all set, however, what you do not
know can crush your long-term business
goals and ability to continue building
business value.
Due to ever-changing goals, interests,
finances, family dynamics, tax laws, and
feelings, a plan that fits your business
and family today may not work for you
tomorrow. Although there's no one-time
event or finish line where you can have it
all done, there are definite milestones to
celebrate.

Misconception #2 - Succession
Planning Means Retirement
Planning
Succession planning often fuels a myriad
of emotions. There is fear you are being
pushed out or as mentioned earlier succession is all about retirement and you're
not ready, or what tends to be the more
common is that you are not ready to give
up control.
While all of these are valid emotions
and should not be minimized, succession planning is not about retirement or
planning for death. It is about maintaining
control planning, fulfilling long-term
business/family dreams planning, building
business value planning.

Misconception #3 - Succession
Planning and Business Growth
Aren't Related
Succession planning is not about you
leaving the business. It is about building

February 2020

a foundation of success today that will set
the course for future generations. Your
dealership may be in a "good spot," so
you've put succession planning on the
back burner. But not having an eye on the
future can be a dangerous thing. Before
you make that next deal or continue with
your growth plan, you should ask yourself
a few vital questions:
1. Do I have the full support of my
management and leadership?
2. Do I have the excess capital and
resources that growth requires?
3. Do I have the confidence that my successor(s) will be able to manage what I'm
building?
All these questions can be answered
through the process of succession planning. This will ensure that your growth is
done the right way at the right time.

Misconception #4 - I'm Too Young
to Think About Succession Planning
Translation: "I am bulletproof, and have
no intention of dying prematurely; I am
not interested in enhancing business
productivity, profitability, and teamwork;
the business is all about me; and I am not
interested in protecting the value of my
business and the welfare of my family."
Believe it or not, these phrases are
commonly muttered by individuals
ranging from age 30-70, but typically from
younger dealers who feel they are invincible. As entrepreneurs, we inherently have
some superhero tendencies, it's required
to go into the risky business of owning a
dealership. This should not get in the way
of building business value. Unfortunately,
it takes one tragic event to motivate these
individuals to act with regard to their
succession plan and ultimately protecting,
maintaining, and building value. Stating
that you are too young to begin succession
planning is like saying you are too old to
go on vacation.
Think about it, the vast majority of

privately-held businesses have more than
80 percent of their net worth tied up in
closely-held stock and real estate. Whether
you like it or not, your financial wellbeing
and that of your family and employees are
dependent upon you.
The reality is you are never too young to
begin. Many lives are impacted by your business, including family, managers, employees, vendors, lenders, etc. There is never a
better time to begin than now. By avoiding
the process, you are leaving a lot of opportunity on the table for purposeful business
growth. The succession planning process
prepares your business to take advantage of
opportunities you otherwise may not have
realized are available to you.

Misconception #5 - A Succession
Plan Isn't Needed If I Plan to Sell
The thought that plans to sell your business may negate the need for succession
planning. Unfortunately, this is a dangerous
path, it has a direct impact on the amount of
cash you'll have in your pocket when you do
sell the business.
Business value is dependent upon the
predictability that the earnings will continue after a transfer of ownership occurs,
whether by sale, gift or estate bequest.
Prospective buyers, banks, Wall Street, and
estate tax auditors all recognize that value
is not all about today's earnings but more
about your foundation and ability to generate revenue tomorrow, and into the future.
Any improvement you can make in the 10
different perspectives of the Succession
Matrix® will build value in your business.
Succession planning involves much more
than addressing your estate and exit plan.
While both are important components, they
represent a small percentage of issues that
impact the current and future success of
your business.
Submit editorial feedback and topic suggestions
by emailing magazine@digitaldealer.com.

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Digital Dealer - February 2020

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