A personal guide to a smooth and successful business succession

Transitioning a business from one generation to the next or working through an ownership change can be difficult The majority of businesses are not successful in transitioning the business to the next generation or outside buyer. Encore Consultants guides the family, the business, the owners and their advisors through the entire succession process in a way that reduces anxiety and brings clarity to a challenging situation.


Tim Schaefer, owner of Encore Consultants in Morris, helps businesses, including family farms, work through the transition of a business succession plan. Contributed photo


“I often compare it to a track and field relay. The business owner holds the baton and there is a period of time where they are passing on the baton to the next generation and are both running together. And then there is a time to let go and let the next generation take over,” said Tim Schaefer, owner of Encore Consultants of Morris. “We want to create a road map for the succession planning process that guides the family, the business, the owners through a successful transition. The best time to start, said Schaefer, is years before the transition is scheduled to take place.

“Most people do not do this near soon enough,” he said. “People really need to start looking at this and talking about it around age 50. That is probably the most ideal time to really buckle down and start the process. This is not a product. This is a process. That is the key thing here. This is a process that works. It is not something that you do once and put on a shelf. It is not so much a document signed, but rather establishing a culture.”

Schaefer’s first step in succession planning is to meet with all stakeholders to assess the situation and come up with a blueprint for the succession. Schaefer talks with each party to establish personal goals, business goals, strengths and weaknesses. He reviews mission statements, financial reports, business agreements and any other important reports or communications.

Next is the design and implementation of the plan.

“We focus on three main areas,” said Schaefer. “We look at the family or family values, the business goals and then we look at the ownership and owners’ needs. We then look at how these three components interact with each other, which is very important.”

Schaefer said discussions about these three components are necessary to move ahead confidently in the process. Many businesses that try to make the transition by themselves often skip the conversations on one or all of these concepts and run into big issues later in the process.

“We often get confused with estate planning, but it is really quite different. This is the process that should occur before estate planning,” said Schaefer. “In typical estate planning, you only deal with ownership change. This completely ignores the needs of the family and ignores the operational aspects of the business. A family may have a great estate plan and legally it might be the best thing for the client, but it doesn’t align with the needs of the business or family. Focusing on legal or tax planning without looking at the family dynamic often leads to unnecessary conflict.” Schaefer’s process looks to minimize conflict at every stage of the transition process. “Conflict most often occurs when one or two steps are skipped in the process. Some family members have not all bought into a plan and it leads to conflict.

Schaefer said the process almost always deals with clarity, communication and conflict.

“If you do take care of the first two, the last one tends to be reduced,” he said. “Conflict will never be eliminated and healthy controlled debate is important, but doing things to reduce harmful conflict is an important part of what we do. These businesses want to create a legacy. It usually isn’t about the money; it is about the legacy. It is their baby. It is a member of the family.”

Schaefer serves as a quarterback during the entire process, asking important questions and bringing clarity to a situation that could otherwise be quite taxing. He also brings in other experts if the situation calls for it.

“We are the hub and then we pull in different spokes,” he said.

Once values and a vision are established, Schaefer helps the client look at capital and human resource needs, before establishing a management succession plan. This includes developing a framework to develop the next generation of leadership, communication and finally governance. Schaefer also provides long-term support once the transition has been completed to make sure all plans are working as they should.

“Attorneys and accountants like (the work we do) because we have done a lot of the preliminary work in the process,” said Schaefer. “We create that framework that they can do their best work in.”

If all the steps are completed, the process generally goes fairly smoothly.

“It doesn’t happen by accident,” he said. “I have never seen a successful business transition happen by accident. It takes a plan. It takes real communication. And this is not something that can be done in a winter or even one year. For a business of any size, it is often a multi-year process, minimum.”

Besides business succession, Encore Consultants also works with businesses on strategic planning.

“I work with successful businesses that may just be stuck on a certain issue on the operations end that it is holding them back,” he said. “Maybe it involves developing middle management or maybe it has to do with preparing the next generation of leaders in the company. Or maybe it is a human resources issues. The old way of hiring and firing and motivating maybe isn’t working anymore. The business is stuck and needs some clarity.”

Often times it is just a matter of asking the right questions and listening to bring clarity to a problem and then working out a plan of action, he said.

“It is not psychology. It’s not like that at all,” he said. “It is figuring out where they are stuck. It is like an onion. We peel back the layers and get to the core. We dig deep in whatever issues they are stuck on and help them work through the process so they can achieve what they want.”

Schaefer has helped several successful businesses through succession planning and strategic planning. He has worked for more than 19 years as a financial and estate planner to businesses and farm families. He was raised on a successful multi-generational family farm near Hancock, and his first business venture was selling sweet corn door to door with an Oliver 70. Schaefer managed the financial planning subsidiary for RiverWood Bank for 12 years before venturing out on his own. His vision was to provide specialized consulting to families and businesses at the crossroads of change.

Schaefer owns and operates Encore Consultants. He works with clients all over the state, all over the country, and even into Canada. He literally has clients from Alberta, Canada to Alabama. Schaefer has a pilot’s license and flies his plane to these clients to stay connected with them year round.

Schaefer is a Certified Professional Business Coach, a Certified Family Business Advisor and is a Certified Financial Planner. He is also a regular contributor to Farm Futures magazine writing on business management via his Executive Matters blog as well as speaking engagements.

To learn more about Encore Consultants, or to set up a free 30-minute pre-consultation, visit www.encore-consultants.net or call 320-288-4084. Encore Consultants are located at 715 Atlantic Avenue, Morris, MN 56267.

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