The 4 D’s of Transition Planning

 

 

Do you ever notice you are likely to buy into an idea when you understand why it’s important?   Understanding the “why” helps connect the dots of reason to action. It’s funny how as children we often asked the all-too-familiar question, “Why should I do that?” Once we grasp the reasons why an issue or task is important, we are more likely to buy into the idea spurring us into action.   Like a race horse running a track, weaving between the opponents in its path, the objectives are clear. Reaching the finish line means winning the race.  The objective isn’t necessarily to finish in first place.  The objective is to finish strong, believing that the task at hand is worth our time, effort, and in some cases, money.

 

Taking the first step to work through your transition plan is the beginning of your race to finish strong.   Your first step may be to understand the four factors that justify “Why should I do that?”

 

 

1. DESIRE

 

Desire is definitely at the heart of the issue. The reason most people choose their profession is because they have a deeply-rooted passion (desire) for the career they elected to pursue.  Plumbers become plumbers; doctors become doctors; and farmers become farmers because they have chosen to do what gives them the greatest pleasure and satisfaction.

 

Confucius said, “Choose a job you love and you will never have to work a day in your life.”  You have the ability to plant the seeds of desire, those things you love most about your profession, in your successor. You are proud of being a business owner.  You built an enterprise with hard work and endured difficult circumstances as well as triumphs.  Your responsibility is to pass along your wisdom, skills, and passion to the next generation of entrepreneurs following in your footsteps.       

 

 

2. DIRECTION

 

Having a direction for your family business provides clarity.   You must discern whether you take a “business first” or “family first” approach.  Does the interest of the business come before the interest of the family? In the development of your succession plan, discussions are important.  Important decisions must also center on timelines.  When do the responsibilities begin to transition in the various areas? You are not required to hand over the leadership role immediately because you may want to remain quite active in the business. However, at some point, you may only want the role of a mentor. When the direction is clear about roles and responsibilities, everyone involved is onboard.  

 

3. DRIVE

 

Changes shouldn’t deter your motivation. You are driven to help your successor transition into the management and leadership role of the business. “Teaching the ropes” to your successor as well as learning the latest innovative ideas from them keeps you active.   Your influence in the business will continue to exist even as your role gradually changes. Your drive, even as a mentor, continues to thrive and survive through the successes of your established business.  

 

4. DREAM

 

A transition plan allows the dream of your family business to continue beyond your reign.  Pride in the accomplishments you achieved will shift to the pride you have in your successor.  You distributed your knowledge, expertise, and wisdom as well as your assets. Letting go of the responsibilities of running your business allows you the freedom to pursue other dreams you may have put on hold.

 

                                                                            

You can probably think of other factors for action that may not be as positive as the ones listed above. If you don’t have a transition plan, you may have disharmony in your family rather than harmony.  Everything you diligently build up in your business could disintegrate before your eyes.  Rather than build trust, family members will distrust each other for unknown reasons.  You want to disarm any suspicions about your intentions for the family business before disagreements arises. The difference-maker will be when you are determined, disciplined, and decisive in your intentions to move forward with your transition plan.  Now is the time to begin your race so you can finish strong.       

An Everlasting Impression

 

 

 

Ronald Read’s Story

Until Ronald Read made the headlines in early February, most did not know of him. From multiple articles, we learn Ronald Read was an “unbelievably frugal” man with a generous heart.  He led a modest life, working with his brother as a mechanic for 25 years.  After the garage was sold, he took a part-time job as a janitor for JC Penny for 17 years.  Mr. Read was born in the small town of Dummerston, Vermont, in 1921.  Like many stories we hear today from parents and grandparents, he, too, had to walk to school, a distance of four miles from his home, to obtain an education.    He was the only member of his family to graduate from high school.  After his military service in World War II, he contently returned to his hometown where he took up his occupation as a mechanic.  In 1960 Ronald married Barbara March, a mother of two children.   Barbara passed away in 1970; Ronald remained a widower until his passing in June, 2014, at the age of 92.     

People may not have paid much attention to him or his activities but one thing is for certain, he did something well.  He was an astute student.  His textbook on investing was the Wall Street Journal.  His vocation went beyond his menial tasks as a mechanic and janitor; he had a knack for picking rock-solid, dividend-paying stocks which rewarded him royally over the years.  He had the foresight to stay on course.  He stayed invested and kept on investing.  Mr. Read may have never read the book, “Automatic Millionaire” by David Bach, yet he put into practice the steps which not only made him a millionaire but a multi-millionaire. 

The heart-warming part of his story is the generosity he showered upon his community, the beneficiaries of his treasure.   From his accumulated wealth, Ronald Read bequeathed $4.8 million to the Brattleboro Memorial Hospital and $1.2 million to the town’s Brooks Memorial Library.  

After Mr. Read’s story was released to the public, many questioned how he obtained such wealth on a modest income.  As of last count, 319 comments appeared under CNBC’s storyline, Here’s how a janitor amassed an $8M fortune.  The quest for an answer began with an examination of his lifestyle.

Lessons Learned from Ronald Read

Surely, if Mr. Read faithfully read the Wall Street Journal, as many people attested he did, he no doubt heeded the advice from Warren Buffett, world’s most successful investor and wealthiest person.  Mr. Read may have digested words of wisdom about investing from this well-known guru and teacher. One such message, “Never invest in a business you can’t understand” attests to his choice of investments in AT&T, Bank of America, CVS, Deere, GE and General Motors.  Regardless, whatever investment advice Mr. Read gleaned from the Wall Street Journal’s teachers, he demonstrated their advice was rock-solid.

There’s a lesson in everyone’s story.  In an interview with Chris Horgan, a strategist with Ramsey Solutions, Chris delivered a message to both investor and advisor.  

·         For the investor, your part is “to identify how much you want to save and how much you want to give away, then figure out how to get there with the help of an investment professional.”

·         For advisors, you need to be “someone who has the heart of a teacher and not someone trying to sell stuff.”

Chris Horgan’s closing comment clinched the importance of investing. "It can be done. In America we need to start believing back in the American dream and stop buying the stuff that's on commercials."   The word, dream, is key.  We are so easily swayed by things we don’t want or need that we lose sight of things that we do.  We simply stop dreaming because things appear unattainable. Regardless of the amount of a person’s salary, we can achieve the dream if we are determined to put effort into working and saving. We have Ronald Read as a role model who clearly confirmed that acquiring wealth is possible.

Everlasting Impression

Mr. Read’s fascinating story left a number of impressions. I wasn’t sure which one made the greatest impact: 

·         His ability to save and invest

(or)

·         His ability to be unselfish and put the needs of others before his own.

Then I decided I did not have to choose, I can accept the fact all these points made an everlasting impression.

You, too, will draw your own conclusions from Mr. Read’s story.  When I think of making “an everlasting impression,” I will think of Mr. Read.  Although he didn’t make his fortune from owning a multi-billion dollar corporation, he did own pieces of multiple companies by buying their stocks.   He applied the slow-and-steady, invest-in-what-you-know investment strategy which led to the accumulation of wealth.  In the end, his family and community benefited by his generous donations because of his choice of life and investment styles.