Qualified Remodeler Magazine

JUL 2013

Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.

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THE TOP 3 MISTAKES THAT DERAIL FAMILY BUSINESS SUCCESSION PLANNING "If the collective belief among remodelers is that they can easily sell their businesses, they must realize very few remodeler s have the bra nds a nd sophistication — including us — where we could get a lot of money for our businesses. Too many remodelers think they can just sell and retire. They think they're going to get the big multiples and lots of value, but it's not always the case. It's important to manage one's expectations," Kelly notes. He adds that it's never too early to think about an exit strategy. "I love the idea of always having one's company in a position where it's sellable at any moment. Have everything well-documented, systems in place, and be profitable. Constantly working on this approach is a good way to go." The Process The first time Kelly bought a business was in 1988 as a seller approached him. At the same time Kelly was interested in operating a business in the area the seller was based — timing was perfect. In the early 2000s Kelly again was interested in expanding into new geographic markets such as Eugene and Bend, Ore., and the intention was to launch a Neil Kelly Inc. location in that area. Again a remodeler, this time focused on cabinets, approached Kelly and suggested buying him so he could retire. "That experience convinced me further that acquiring businesses was in many ways a good way for Neil Kelly Inc. to enter a market. In all the cases when we've bought a company, the businesses were for sale either because of life changes or retirement reasons. I don't have intentions of moving into another market right now, but if I did I would be on top of the list of potential buyers for anyone wanting to sell," Kelly says. A company's value, Kelly notes, is not always a dollar figure. "The value is in the assets, its clients, its employees. By Lois Lang, Psy.D. When it comes to family business succession planning, one thing is certain: Most family business leaders don't do it, they don't do it well, or they wait to do it until it's too late. So, why can't the senior generation just "let go?" Here are the top three reasons. 1. Poor financial planning. The leader may have been personally financing many of the ups and downs of the business, leaving their wealth tied to it. Early and frequent planning with a team of advisors is essential for the owner to be able to step back and allow the next generation to lead. 2. A fear of letting go. Letting go of the business can feel like a clear admission of one's mortality. As one family business CEO said, "Admitting to retirement is the same as saying I have one foot in the grave and the other will soon follow." 3. A feeling of powerlessness. For many family business leaders, the sense of powerlessness is strong when letting go of the known for the unknown. Preparing for retirement by building financial stability, outside hobbies and friendships can allow one to keep any negative feelings or fears at bay. Lois Lang is a partner with Evolve Partner Group. For more information circle 29

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