Exit Planning: Ensuring the Survival of Your Family Business - The P.I.E. Method.

Only 30% of family businesses will survive to the next generation. Thankfully, there’s a solution.

In the book Secrets to Succession, Gerard Gust covers the P.I.E. Method – Priming, Implementing, and Ensuring success. In the Priming section, he gives a master class on how to prepare yourself, your heir, and your business for the next chapter.

Here are the 3 entities that need your Priming before you go to sell your business:

1. Prime the Owner. As the owner, you need to do 3 things to prime yourself to pass on the business to your next generation: Do your future business a favor: Start here, with yourself.
   

   1. Clarify your purpose: The number one reason businesses fail to transition is “owner’s cold feet”. If you want to sell, but have not thought about your next act, you are not going to succeed.
      

   2. Establish your timeframe: Dan Sullivan says “there are no unrealistic goals, only unrealistic timeframes”. Give yourself sufficient time to make a transition, and communicate it to your team.
      

   3. Gain family support: This could be a series of books on its own, but your loved ones need to know what parts they will (or won’t) play in your future transition. Communicate this often, with clarity and love.

2. Prime the Successor. To prime your rising generation, start now, wherever they are in their development. If family succession is the future, it’s best to prepare your successor now.
   

   1. Before they come: In early life at home, in their education, and in their career before they come to work in your company (which we highly recommend), create mentorship opportunities for your successor.
      

   2. As an employee: allow others in your company to mentor them, give them opportunities to learn, and delegate responsibilities to them to learn the business and the industry.
      

   3. Avoiding pitfalls: Temper expectations and get them in line with reality, treat your child more as an employee than an heir (at least at work), and when the time comes for succession, give them the space to make the role their own.
      

3. Prime the Business. Gust has some great advice for preparing your business for your successor. Here are the three main ideas:
   

   1. Building your company to last: think “E-Myth Revisited” if you have read it. Create systems and processes so the business runs the way it should without you having to “run” each aspect of it.
      

   2. Making tough decisions: Family businesses often have “legacy employees”, folks that are good friends but not good employees. Don’t leave the difficult decisions for your successor. Make sure you have A-Players.
      

   3. Enlisting staff support: Every successful business has key people (besides you, the owner) who drive its continued success. You need these people on board with your succession plan, and they need to see their part in your future company.

Remember:

1. Prime Yourself;

2. Prime the Successor; and

3. Prime the company.
   

That’s it for today. We’ll see you tomorrow for the next one!

Any opinions are those of Timothy Weddle and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation.