SUCCESSION PLANNING IN THE TRUCKING INDUSTRY MAY 6, 2015 JEFF NOBLE, CMC THE BDO SUCCESSCARE PROGRAM. Physical. Social.

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1 SUCCESSION PLANNING IN THE TRUCKING INDUSTRY MAY 6, 2015 Physical Social JEFF NOBLE, CMC THE BDO SUCCESSCARE PROGRAM Intellectual Powered by The BDO SuccessCare Program

2 MANY BUSINESS OWNERS STILL FAIL TO PLAN AHEAD A recent BDO survey showed that: The majority of business owners are focused on actions and strategies to secure long-term success But only 25% have a succession plan to address the day when they are no longer able or willing to run the operation What is more long-term than the transition of the business? Succession planning remains stuck at the bottom of most people s agendas 2

3 OVERVIEW The good news and the bad news Common roadblocks to be aware of in planning for succession Critical success factors for protecting your tangible and intangible assets Key strategies for integrating your long-term business strategy with a proven approach to preparing for your inevitable exit and sale of your business 3

4 THE GOOD NEWS Over 90% of North-American businesses are family-controlled In Canada these businesses: Generate almost 60% of the GDP Employ about 60% of the workforce Create 70% of all new jobs 80% feel the business has a definite impact on their family identity 84% would love to pass the baton to a family member 4

5 THE BAD NEWS Demographics show that 75% of Canadian businesses are expected to change leadership in 1 to 2 car leases: That s 350,000 businesses Approximately $1 trillion will change hands Less than half have a succession plan and/or an identified successor Historically, 70% of families are unsuccessful in transitioning wealth: 60% of failures are the result of a breakdown in trust and communication 25% are attributed to inadequate preparation of heirs 5 Source: PWC, Laird Tyne, CFIB, MassMutual, Williams & Preisser

6 WHY SME S DO NOT HAVE SUCCESSION PLANS Too early to plan for succession 60% 52% No time to deal with issue 28% 29% Can t find adequate advice/tools to start 17% 21% Too complex 12% 16% Other 11% 12% Don t want to think about leaving Conflict with family/employees 3% 8% 5% 13% Source: CFIB 2005 vs

7 EVERY BUSINESS WILL BE SOLD EVENTUALLY Death / disability Disagreement / divorce Decline in profitability Franchisor Inside the family / business Lifestyle changes Involuntarily Voluntarily Outside the family / business It can take up to ten years to create the choice! 7

8 THE BUSINESS HIGHWAY Warning: possible bridge out ahead Exit Ramp 8

9 TYPICAL ROADBLOCKS ~ DIFFERING OBJECTIVES Well-being of family, employees, partners A cohesive ownership group with a common vision A profitable and successful business 9 Image adapted from the 3-circle model by Tagiuri & Davis

10 TYPICAL ROADBLOCKS ~ DIFFERING OBJECTIVES Well-being Emotional Centre of family, employees, Empathy partners Support A Wealth cohesive Centre ownership group Stewardship with a common vision Fair and Equitable Wealth Engine A profitable and successful Opportunity business Competition 10 Image adapted from the 3-circle model by Tagiuri & Davis

11 MOST FEEL SUCCESSION IS NEGATIVE Succession implies retirement ~ and retirement means to take something out of use So succession means giving up control Some feel succession can lead to a loss of wealth Some fear succession will cause family conflict 11

12 THREE FEARS Fear of losing wealth Fear of losing control Fear of creating conflict 12

13 CRITICAL SUCCESS FACTOR~ MORE THAN FINANCIAL Traditionally Transition of Ownership and Management In Reality About Transfer of Authority and Relationships Ultimately About Transfer of Knowledge and Wisdom If you focus on the traditional, you will omit the key components of a successful transition 13

14 CRITICAL SUCCESS FACTORS Principles and Values Individual/Family Reputation Personal Relationships Family Traditions Philanthropy Environment Shares Cash Property Equipment Vehicles Education Competencies Product Knowledge Experience and Wisdom Business Relationships Business Reputation 14

15 CRITICAL SUCCESS FACTORS Principles and Values Individual/Family Enable the legacy Reputation Personal through Relationships support of Family individuals, Traditions family unit Philanthropy and greater community Environment Provide Shares for the financial Cash independence and Property lifestyle of retiring Equipment Vehicles and future generations Education Enhance Competencies the success of Product the individual Knowledge and the Experience profitability and Wisdom of Business the Relationships operation Business Reputation 15

16 COMPARISON BY CATEGORY 16

17 CRITICAL SUCCESS FACTOR ~ CREATE A WE FOCUS POSITIVE OUTCOME MODEL YESTERDAY TODAY TOMORROW 96% FAIL TO FIND A POSITIVE OUTCOME Principles/ Values Structures 70% FIND A POSITIVE OUTCOME History/ Relationships Common Interest Moods/ Personalities Facts 17

18 THE BDO SUCCESSCARE PROGRAM TM Building A Bigger Future CONTACT JEFF: Family/ Personal Ownership Business Powered by The BDO SuccessCare Program