|A LETTER FROM THE PRESIDENT
Joseph B. Smith, President & CEO
This month we hosted a great event in a series we call What Drives Growth (WDG). WDG was born out of some of our Risk Advisors a few years ago suggesting we find a way to get “growth” clients of ours together to share how and why they are growth companies. The concept was to see if we could decipher the characteristics of the companies that were growing versus those that were stagnant and not growing. So we took certain categories or variables of growth and created sessions with panelists who are leaders of teams and part of a “growth story” in their careers.
Culture – how and why building a great culture will create opportunity and capacity for growth and make it sustainable.
M&A – how to use M&A to build accretive value.
Personal Growth – you can’t serve from an empty vessel – meaning you can’t grow if you are broken down mentally, spiritually, or physically.
Financial Risk During Height of Pandemic – where we talked about long-term investing during the deepest recession we had during Covid and how to keep the foundational models in play amongst the chaos of uncertainty.
And last week, we hosted a session on Internal Business Succession. 60 to 70% of the closely held private businesses have no succession plan. Think about this – one of the most severe risks for private businesses which rely on the founder or a few key people is the risk of something happening to them unexpectedly – death or disability or them leaving voluntarily or wanting an exit for retirement with no plan on how this will happen. Yet, up to 70% of those businesses do not even have a plan to address this severe risk.
In our experience, this is because it is a tough subject to address and quite complicated, thus it gets put off and not prioritized. To me, this is like flying a plane every day with no safety or navigational instruments, with no one skilled to fly, no second pilot, no maintenance program, and when bad weather hits “hoping’ to land the plane and survive.”
Succession is complicated because it has three significant hurdles or challenges:
In Warren Buffet’s most recent annual report, he states, “Our CEO will always be the Chief Risk Officer – a task it is irresponsible to delegate.” As CRO for a private company, succession is a bigger risk. Owners/CEO’s need to address succession before it becomes a crisis.
Our panel was spectacular and below you will see the major takeaways from this session. Please read them and call us. The issues are very similar and the status of where a private company is in Emotionally, Operationally and Financially differs and solutions will always be tailored for the companies.
Your current Risk Advisor is a great resource for beginning this critical discussion. Additionally, Jeff Giantonio from our Smith Brothers Financial team is a Certified Business Succession Consultant and works with businesses of all different industries. Jeff can be reached at firstname.lastname@example.org or 860-430-3347.
I hope the audience at our sessions – we had 100 people attend – and you as a reader of this newsletter will take action as – Succession should be a process not a crisis.