Most CEOs have achieved some level of success in their business and finances, as well as their personal lives. Beyond that, many seek something more – a bigger meaning, purpose or legacy. Finding that significance is a very personal journey; however, most successful people discover that aligning all the components of their lives (personal finances, business success and family satisfaction) leads to a sense of liberation that includes financial freedom as well as peace of mind.
This is the first article in a five-part conversation about this journey from success to significance. To kick off our discussion, let’s admit that “finding significance” is a tough topic. It is complex and emotionally daunting, partly because it involves so many different aspects of life:
- Personal issues, such as lifestyle, vision, goals and providing for family members
- Financial issues, including how to pay for personal goals and align plans with the mathematical realities
- Tax issues, since taxes are a fact of life and the way you meet this responsibility will have a significant impact on your personal and financial options
- Business issues, like deciding on new leadership and what the transition will look like
- Legal issues, to protect yourself, loved ones and property from potential risks
- Value creation, by maximizing the value of your business to fulfill your personal vision and financial goals
- Contingency planning, since we live in an ever-changing world
Connecting these dots effectively means transcending the traditional silos and thinking through various domains with your advisors to formulate an integrated strategy. Business exit planning forms the central core of this process. Your business is a huge source of satisfaction and pride, and it’s hard to imagine life without the business – or the business without you. Even so, this process lays the foundation for the meaning you seek. The way you plan for your succession and eventual exit, no matter what form it takes, is your greatest opportunity to impact future generations and create your legacy. In addition, fitting business succession plans into personal and financial plans is just good business strategy.
What Gets in the Way: Emotional Reasons
But why, then, do we so often delay? Reasons for procrastination or avoidance range from the deeply psychological to the purely practical. It starts with language. Words like ‘succession,’ ‘exit’ and ‘transition’ make us think ‘end,’ writ large: an end to life as we know it, or an end to life in the most final sense.
Without consciously recognizing it, we tend to avoid making an exit plan (by any name) simply out of a desire to avoid “the end.” After all, we’re not ready to die by any means, nor are we anxious to give up what we know and love about our lives today. Formulating a transition plan forces us to wrestle with complicated issues, from our inevitable aging and mortality to interpersonal relationships and difficult family dynamics.
When we do think about the issue enough to recognize that planning does not signify our readiness – or even our willingness – to embrace change, we’re still dealing in the emotional domain. Without a compelling reason to dwell on thoughts that trigger an emotional response, most of us will choose to avoid them.
What Gets in the Way: Practical Concerns
On the practical side, there may be financial concerns about losing income from the business, or about the business suffering without our leadership. There could also be confusion around the planning process that limits understanding of its benefits, or just a healthy desire to keep things as they are. It’s also true that people are living longer these days. Some business owners are pushing transition into their 80s and even their 90s.
That’s a fine path to pursue if it feels like the right one – provided, of course, that you have a plan in place. When the time comes, as it eventually must, it is both objectively better and subjectively easier to enter a new phase in accordance with an established plan. And as a bonus, the peace that comes with completing transition plans can bring new enjoyment in the present, however you choose to spend this time.
Talk to your RKL advisor to learn more about why transition planning is so important and how we can help make it easier.