Session Preview: Ryan Barradas: Plan for Decisions

Don't just decide to plan.

Business succession and estate planning expert Ryan Barradas, founder and managing partner of Wealthpoint LLC, will discuss business “Succession or Exit?” issues from 9:00 -11:00 a.m. on Monday, Nov. 11.

What is succession and exit planning? It’s a process that helps to facilitate one of two events — sometimes both. First, it plans for the entrepreneur or entrepreneurial family group to eventually become financially independent of the operating asset as their primary source of cash flow. Meaning, where and when do I cross over the line from,
“I need more” to “I have enough?”

Second, it could help the operating asset become independent of the entrepreneur or entrepreneurial family group as its primary driving force. Basically, it’s how you transition from an owner-manager-entrepreneur to an owner-investor. How can I walk away from the business and feel confident that it will run as well, if not better, in my absence and provide me a competitive rate of return on my asset?

Before we go any further, let’s agree on one fact: you will exit your business somehow, someday. This can only happen in one of five ways: death, disability, voluntary sale, retirement or bankruptcy/orderly liquidation. Regardless of your method of exit, to maximize your value and/or the
likelihood the business will succeed you; the business must be managed as if it were for sale on any given day.

The same things that are common
discounts at the time of transfer in a third party sale can sabotage an intrafamily succession plan or sale to key employees (lack of management team depth, customer concentration, lack of financial controls, process or procedural deficiencies, etc.).

Let’s look at the entrepreneur’s mind set when they begin planning. As you built your empire you gathered life experiences and you also gathered biases. Without a process to think through what you can achieve, you presume your choices are few. You get stuck at doing nothing.

As an entrepreneur, your big decisions are inseparable from who you are as a person. So
your decision making is defined by your ability to arrive at unshakable gut instincts. You need someone to help you get truly present in your thinking. The subconscious layers of bias peel away and give rise to pinpoint wisdom about desired outcomes. You need
to get to that place of instinctual decision-making you know and trust.

Without this level of clarity, you might move forward with planning for a little while, but when it comes time to execute, you’ll back away from the table. There’s simply too much at stake with your wealth, your business and your relationships to risk faltering.

This is why planning and decision making must occur in three realms simultaneously: the relational factors that are unique to closely- or family-held businesses; the operational issues that need to be addressed in running any business for maximum value and finally;
the benchmarking of how various strategies, economic conditions and outcomes affect you, others and the business numerically.

To accomplish this, the process must transform from traditional planning to decision making. As advisors, we all love a great planning process. But for you the entrepreneur, the planning really happens in the background. What you need is a process that allows you to make pinpoint decisions about desired outcomes. “Where am I today? Where do I need to go? Who do I feel responsible for? Whose feelings do I need to be mindful of? What are the business and personal risks I want to mitigate? What’s my time frame?”

Once you create well-defined macro goals, decision making becomes infinitely easier. The latest “flavor of the month” or other crazy business idea no longer derails or distracts you from your long-term objectives if it doesn’t pass this test: “Does this help me accomplish all or a majority of my macro goals?” If not, move on. CS

Ryan Barradas is the founder and managing partner of WealthPoint, LLC in Phoenix, Ariz. WealthPoint is a nationally recognized firm that specializes in the areas of succession, exit and wealth transfer planning for entrepreneurial family groups. He can be reached via the website: