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Tag: succession planning

How businesses without a succession plan get started

Roughly 75% of small businesses don’t have a succession plan, according to Entrepreneur.com  

Across central Pennsylvania – as throughout the nation – those numbers are pretty accurate. It tells the story of – how and why – this important business planning tool can become neglected or postponed, according John Stoner a partner at RKL’s Business Consulting Services Group. RKL’s has offices in Harrisburg, York, Reading and Allentown, among other locations.  

Leaving a business you’ve spent your entire career building isn’t an easy task. Even under the best circumstances, with willing family or key employees ready to step up and into leadership positions, it can be an overwhelming process.   

Three primary components of succession planning involve a discovery process about your business. These key points include: 

  • Value proposition or what is the business truly worth. 
  • Candidates to take over the business. 
  • Timeline.

“Too many conversations with new clients [begin with] they want to retire in six months and that’s how it begins,” Stoner said.  

He noted it could take three years or more for a son or daughter to get up to speed with running the business.  

“Those are hard conversations and you have to have them for everyone’s well being. You won’t do them any favors to hand over a business they [children, new hires or key employees] are not prepared to run,” he said.  

For many business owners time spent running day-to-day operations consumes most of their energy. That makes planning for a future they may not eager to embrace isn’t a top priority.  

“It’s hard for people actively involved in the business to say they are going to retire,” he said.  

Brian Black, a partner and consultant at North Group Consultants in Lititz, Lancaster County, said his company facilitates a “quarterback role for business owners” when putting together a succession plan. 

North Group helps businesses grow through leadership and team development, succession planning, hiring and mergers and acquisitions.   

“For the business owner who is all in and built the business from the ground up, [they might have] a hard time letting go,” Black said.  

Many of the talents and skills entrepreneurs bring to the table like resilience, hard work, persistence and a tendency to be “doers” can get in the way of crafting a succession plan.  

“So many people know how to run their business, get outcomes and it’s very gratifying. When they face this idea of transition- they don’t know what to do,” Black said. 

For those who see transition in fuzzy or difficult terms, they may not have a clear picture of who they are outside the business, he said. 

“Visually, what [does] the succession plan look like? You don’t have to deal with everything immediately” or all at once, Stoner said. 

Stoner said of those businesses with a succession plan, estimated to be about 25 to 30%, about 98% of those do not have one that is “executable.” 

“For most people it’s their life’s work, and they want to get it right. There is no perfect, way, no easy answer, but there are choices and every exit strategy has plusses and minuses,” Stoner said. 

Crafting a future vision of what the business will look like is another aspect of succession planning.  

Partnering or bringing professionals in like attorneys, tax firms, consultants and coaches that can help business owners navigate the succession planning process takes the load off the business owner in crafting a plan and creating manageable action steps.   

“Understanding the qualities of leadership, what it takes to manage other people, strategic thinking – you have to master those skills or hire people who can provide those kinds of skills. Not everyone is aligned with all of that,” Stoner explained.  

In order to focus on the right people for potential succession opportunities in your business, consider and honestly determine candidates who can: 

  • Understand and have the leadership qualities to run the business. 
  • Understand the value of human capital, and what it takes to manage people. 
  • Have the ability to think strategically.  
  • Have experience or skills to be able to hire qualified employees.

A third-party valuation of the business and its net assets is crucial to developing a successful succession plan.  

“A reality check based on valuation methodology, not how big your business is or assets but what is your net value,” Stoner explained.  

Because it’s easy to see your hard work as more cash value that it may be, and independent valuation is the best way to determine how much a business is worth.  

In addition to valuing the business as it stands financial modeling offers a forward “look see” to assess the profit making capacity of the business, which can provide discretionary profits to fund the succession plan, he said.  

“Understand the profit making capacity of your business, it’s not only important in valuing but in managing and running your business,” Stoner said.  

“Often it’s a financial transaction. A lot of people look at their bottom line, but you have dig deeper. What is the global cash flow – or what is left over when everyone else [and everything else] is paid,” Stoner said.  

That can include working capital to fund regular operations as well as debt service and meeting capital expenditures.  

Stoner said strategic buyers ask questions about due diligence and your quality of earnings assessment.  

“That’s usually the first reality check. How much value have we created and is it adequate to support our needs,” he said.  

Going through this exercise early creates not only a plan but time and a timeline to work toward the plan for a successful outcome.  

“Timing is critical. Understanding the realities of your business early [on] gives you time to plan and improve,” Stoner said.  

Michael Mitchell is executive director at High Center at Elizabethtown College in Elizabethtown, Lancaster County.   

He said the discovery process to create a succession plan is vital because many don’t know where to start.  

“It’s a daunting task, and that’s one reason people don’t venture down that path,” Mitchell said.  

He said groups like High Center encourage business owners to take a first step. Reach out to other family businesses who have successfully navigated the succession process. Realize hiring professional services along the way to navigate the process is usually in everyone’s best interests.  

“You’ll need financial and legal advisers to navigate ownership. Just take a first step,” Mitchell said. 

 

Melinda Rizzo is a freelance writer 

 

 

 

 

  

 

Thinking of selling your business? Here’s why now might be the best time.

Business owners looking to sell or transfer their business to a family member may have some tax decisions to make if the Biden administration gets its tax code revisions through Congress this year.

Don Petrille, senior lawyer with High Swartz, Doylestown, said the 2017 Tax Cut and Jobs Act created a lot of exemptions for business owners. However, many of those could go away by 2026, if not sooner.

The Biden administration’s American Jobs Plan would change the current Step-up in Basis law that Petrille explains using stock purchases as an example. “If you buy a stock at $10, that is your basis. If it appreciated to $15, your capital gain is $5,” he said. “If you give the stock to someone, they get your basis. So, under the current rules, the basis is based on what it is worth (when bought).”

That relates to selling a company. If an owner sells a company, the basis is what it is worth when it was started. Under the Biden proposal, the basis would be what the company is worth when sold. That will increase capital gains taxes.

John Reed, partner with Barley Snyder, Lancaster, expected capital gains to increase last year. “We all think change is coming, but we don’t know when.”

The takeaway, he said, “if someone is thinking about retiring, they should do it now when we know what the rules are.”

Colin Keefe, partner with Fitzpatrick, Lentz & Bubba, Allentown, agreed. “It’s a good time to sell because we believe taxes will go up in 2022.”

Reed said succession planning comes with many challenges. The proposed changes could make the financial challenges even greater.

“There is risk inherent in this,” he said. “If (the owner) needs to get money out of the business (to live on), he may sell to others and rely on monthly income. There is risk in that,” he said. “You hand control over to someone else and you no longer have control over the running of the operation.”

Petrille said owners have to take a holistic approach to keep the business going. “You have to look at what the departing owner is taking with him; his knowledge, vendor relationships, and what he contributes daily to the operation. How are you going to finance that?”

Insurance can offer some protection, he said. It can be used to retain people who can run the business or to get through rough times during the transition.

Many entrepreneurs will use a self-directed IRA to start a business, he said. The ownership is then tied to that. The Setting Every Community Up for Retirement Enhancement Act (SECURE) of 2019 says if you inherit an IRA, or a business funded by one, you have to liquidate it and pay income tax and penalties or pay income tax on the money over a 10-year period.

“This is also integrated with estate planning because you own a business and that business has value which is taxed by Pennsylvania,” he said. “So, you need to have liquidity to pay the taxes owed nine months after the person’s death.”

Inheritance tax now stands at 4.5 % for children and 12% for siblings.

“Business owners are perceived to be wealthy,” Petrille said. “But wealth doesn’t always mean you have liquidity.”

Consider the construction worker who starts his own business using his personal truck, he said. The basis for this business is zero. But, as the business grows, and the owner hires more workers, buys more trucks and maybe even establishes a shop, the business value goes up. And though the value has increased, there may be no extra cash flow. If the owner sells the capital gains would be on the basis of zero.

If the Biden plan is passed, the basis would be on the value of the company at time of sale. “So, if the business is worth, say $10 million, the taxes could total $4 million. Where do you get the cash to make the transaction?”

Keefe said it is a good time to sell if a business owner is thinking of retiring. “There are lots of buyers right now and the interest rates are still low.”

Biden’s tax plan is in committee. The proposed $4 trillion of new federal spending over 10 years will be partially funded with higher taxes on individuals and businesses. Members of the House and Senate have put forth bills that include everything from increases in capital gains and corporate income taxes to new individual and business tax credits, according to the Tax Foundation.

Developing a succession plan is vital for family businesses 

Family businesses are a big and important part of the economy and account for more than 50% of U.S. GDP, and 35% of Fortune 500 companies are controlled by families and family owned companies are responsible for 60% of jobs in America.

A recent family business survey conducted by the National Bureau of Economic Research’s Family Business Alliance indicates that only 15% of the family businesses have developed and documented anything appearing to be a succession plan. This is troubling because succession of ownership and leadership is a critical issue for the long-term success of a business. 

Respondents to a Family Business Institute survey that asked why their business did not have a succession plan said that “time to deal with the issue” was a significant constraint. Other reasons included feeling it was too early to plan for succession, inability to find adequate advice or tools to start, finding the topic too complex, not wanting to think about leaving the business, and fear of conflict with family or employees

The undesirable result of not having a succession plan is evidenced by the great difficulty in surviving through multiple generations. A family business surviving to the second generation is a milestone event because only 30% make it through the second generation. Furthermore, only 12% make it through the third, according to PwC in “The Family Business Sector in 2016: Success and Succession.”

What Is Succession Planning?

Succession planning is a critical factor for the long-term success of any business and especially for family businesses. Leadership transitions in business affect the entire organization’s continuity, employee retention, client retention and returns on investment. It is essential to create and implement a process that creates visibility, accountability and greater integration of all facets of the business.

All business owners will depart their businesses at some point by design or by default. A succession plan

helps ensure that owners have control over how their businesses transfer to the next owner. Succession planning

is the process of developing a written plan for transition of ownership and leadership when an owner and/or

leader decides to leave the business either voluntarily, such as retirement, or involuntarily, such as death or

incapacitation. 

What needs to be done to prepare for succession planning for the family business? A suggested outline of a strategically structured process for family business succession planning is presented here.

FIRST: Start with seven actions to strategically structure a succession planning process. 

1: Begin the succession planning process early.

2: Clearly determine and communicate the purpose, goals, and extent of the leadership succession plan or program.

3: Clearly define the desired and required qualities of the new leader.

4: Develop a clearly focused leadership development strategy.

5: Develop a talent management process that will incorporate strategic thinking for specific development opportunities for future leaders.

6: Identify future leadership candidates by developing a system for assessing current and future leadership needs.

7: Identify a system for communicating information to ensure that the leadership succession and/or development programs are in line with strategic business needs.

Next: Follow an overall outline of the suggested planning process to create a succession plan. 

I: Goals & Objectives

  • Develop vision & mission statements for the business.
  • Develop a list of core values & guiding principles.
  • Develop short- & long-term goals for the business.
  • Identify the stakeholders for the business.
  • Develop a personal vision with personal goals.
  • Develop retirement goals.
  • Create a team of advisors for the succession planning effort

II. Exit Strategy

  • Develop options for departures from the business.
  • Review the developed options for the exit strategy from the business.
  • Select the most desired option for the exit strategy.

III. Business Valuation

  • Obtain professional advice to determine the value of the business.
  • Determine the value of the business.
  • Determine a current value of the business assets & liabilities.
  • Determine the goodwill value of the business.

IV: Business Structure

  • Identify and quantify business debt.
  • Recruit & retain productive employees.
  • Structure business to maximize value.
  • Document key processes & procedures used in the business.

V: Tax Considerations

  • Develop financial goals.
  • Identify tax implications of the current business.
  • Plan & implement tax strategy to minimize taxes.

VI: Legal Considerations

  • Retain professional legal counsel.
  • Develop a buy-sell agreement for the business.

VII:  Estate Plans

  • Retain a professional estate planning adviser.
  • Develop an estate plan.

VIII. Successor Selection

  • Develop specific criteria for successor(s).
  • Recruit and select successor(s) based upon identified criteria.
  • Communicate selection of successor to stakeholders.

IX: Successor Training

  • Develop a list of characteristics and skills needed by successor(s).
  • Develop a training plan for successor(s).
  • Develop a coaching/mentoring plan for successor(s).
  • Establish a timeline for successor(s) plan.

X: Contingency Plan

  • Develop a contingency plan (based on the “What Ifs?”).
  • Research & identify insurance needs (disability; personal life; critical illness; business; key person; etc.).\
  • Select & train a key employee to take over in case of emergency or unforeseen event.
  • Communicate the plan to stakeholders & advisers.

XI: Implementation Plan

  • Document the roles, responsibilities & expectations concerning the transition of ownership.
  • Identify a facilitator to make sure the process of succession is carried out.

XII: Timelines

  • Identify the management transition timeline.
  • Identify transition of ownership of your business timeline.
  • Identify the complete business exit timeline.

XIII:  Communication

  • Document the succession plan.
  • Document how to proceed with the succession plan in the event of an unforeseen event (accident, illness, death).
  • Document the transition or exit strategy to inform family, employees, clients, vendors, community & all stakeholders.

I leave you with this additional thought on succession planning.

“One of the things we often miss in succession planning is that it should be gradual and thoughtful, with lots of sharing of information and knowledge and perspective so that it’s almost a non-event when it happens.” Anne Mulcahy, former Chairperson and CEO of Xerox Corporation.

Glenn Ebersole is a registered professional engineer and is the Executive Director, Strategic Business Development/Marketing for RCS Construction – a woman owned general contractor firm – in Collegeville, PA. He can be reached at 610-415-1130 or [email protected] 

Is your company ready for sudden change?

Proper succession planning can save a business. (Photo: Getty Images)

News of Ollie’s Bargain Outlet CEO, president and founder Mark Butler’s death spread quickly last week, sending company officials into damage control.

The prompt naming of company COO John Swygert as interim president and CEO did little to assuage investors as the discount store chain’s stock dropped nearly 10% on the first day of the passing of its prominent face and leader.

By the end of the week, stock prices had stabilized around $60 after dropping as low as $56.83 a share.

The volatility of the value of a company is not uncommon around the unexpected exit of an organization’s leader, experts said, but what the management of a company does before and, in the short term after, sudden disruption in its leadership succession and ownership protocols, can determine its long-term success and survivability.

John Stoner, a business consulting partner and CPA with Manheim Township-based RKL LLP, said having a succession plan in place is a key component to the ongoing prosperity of a company.

“The disruption caused by the sudden loss of any key employee, whether it be the founder or the owner or just a key operational employee, is certainly a major risk factor,” he said.

Much of the work Stoner does at RKL concerns business succession planning, business valuation and helping family businesses decide how to transition when an entrepreneur or leader is gone. He advises clients think beyond the “here and now,” and take a long view of the preferred path for moving the business forward.

The best planning can always go awry, so it’s important for an organization to consider the “what-ifs,” including what happens if a key owner or leader is unable to continue in their role in the business through death, disability or a sudden resignation, Stoner said.

While Ollie’s is a large, publicly traded company, succession planning is important for small, family owned businesses as well. Perhaps more so, according to Trevor Bare, a consulting actuary at Conrad Siegel in Harrisburg.

“A company should make sure to have people in place, or being trained, to be their future leaders and are ready to step in at the time,” he said.

Figuring out in advance how a company will handle the sudden departure of a key player is often overlooked, even by large firms.

Organizations can be lackadaisical about asking a hard question, such as what is the next step if a leader gets hit by a bus? What will impact the business? Who will fill their shoes? What is the communication plan for informing customers and employees?

Most businesses are already being challenged with technological advances, more competition and changes in customer preferences, Stoner said. Factor in the loss of a boss and issues will emerge quickly. Coming up with contingency plans and a line of succession before an emergency is key.

It’s never too early for a large or small company to identify the next generation of leaders in the organization, and groom them through opportunities in education, experience and advancement so they can assume leadership roles when a sudden departure happens.

Many unprepared

Many businesses don’t have a succession plans, while others have a plan but don’t take into consideration changes that inevitably happen after a plan is implemented. A succession plans need to be reevaluated constantly to ensure key positions are filled, Stoner said.

A large publicly traded company like Ollie’s will typically have a plan in place even when it has a very visible owner like Butler, Stoner said, with the decision of next steps falling on the shoulders of the board of directors who are in place to mitigate risks.

“Every business has business risks, and a board of directors would say, ‘What are we doing to identify our risks, prioritize what we think are the more significant, impactful risks? And are we prepared to have a contingency plan that will allow the business to function normally during this period of disruption and, hopefully, stabilization over time?’” Stoner asked.

A historical example of the loss of a major company figure was the death of Walt Disney in 1966 and the subsequent search for a new leader. Stoner said there was a short period of time after Disney’s death when there were hard discussions being held to decide who was going to lead, with the board ultimately deciding on his older brother, Roy.

In many cases of companies that lose a leader who was the face of the organization, but was not involved in the day-to-day operations anymore.

“Many organizations have experienced this disruption,” Stoner said. “Some have prepared and responded better than others, but I think the public marketplace always has the sky-is-falling expectation without even knowing if the company has a plan in place and is able to pick up the pieces and sustain the business moving forward.”

Ask the right questions

A question business owners and investors need to ask is how impactful would the death or resignation of a top executive be on the long-term future of the company. They should keep in mind that the public will be watching to see if the organization has the right people to fill leadership roles, or will they need to recruit from the outside to continue the company’s vision.

Large companies that have a broad organization typically have a plan in place, Stoner said. What he sees as a more concerning issue is when an entrepreneur is the face and driving force of a business and they are suddenly gone.

Stoner said entrepreneurs in family-owned businesses are most likely to not have a succession plan, leading to the potential for disaster.

“When (an entrepreneur) is abruptly removed from the business, that’s a business that’s in peril,” he said. “But a large, diversified company probably has the business sophistication to have put in place plans – both short term and long term – on how to deal with this. But it will take some time for that plan to be accepted by the general public.”

The ownership question

An even bigger issue for the survivability of a company is when its ownership is in doubt after a sudden change. While it’s not a concern for a publicly traded company like Ollie’s, ownership has the potential to be a make-or-break factor for smaller, family-owned businesses.

Conrad Siegel’s Bare, works with smaller businesses looking to pass ownership on through an employee stock ownership program, or ESOP.  Through debt, the company is sold to the employees, and over time the employees receive ownership of the company through their retirement fund.

In this case, Bare said, the seller, typically the family of the entrepreneur who left, will get a fair market value for the company. Because the ownership stays in local hands and the employees have a stake in the company, it’s more likely the organization will not experience major changes.

If a company is sold to a competitor or a private equity firm, the future of that entity is often uncertain, including possible layoffs, rebranding or relocating.

One of the main selling points of an ESOP, is that it can preserve the legacy of the owner.

“A family may be more interested in preserving the legacy of the owner than trying to squeeze every last penny out of the transaction,” Bare said. “The ESOP is a way of keeping the company alive in the community.”

An ESOP is ideally put in place before the sudden death or departure of a business owner because it can take several months for the transaction to be finalized. In the cases where an ESOP is created after a sudden change, a company’s leadership succession plan is key in keeping the business stable and moving forward during the transition.

Ask John Dame: Old and new leadership visions must align during business acquisition

Q: Our company made a major acquisition a year ago. The owner of the company we purchased has stayed as president of his company. Additionally, he decided not to sell 100% of his company, and now has some ownership in the larger combined company and serves as a board member. He reports to me directly. The problem is that over a year later he is putting up roadblocks and fighting the integration process we agreed upon at the time of the purchase of his company. This is a big problem, and it is getting more costly by the minute. What can I do?

A: Wow! This can be and is a serious problem. You have two separate organizations instead of one aligned company. From our discussions, you have had several conversations with this leader, and he nods and says he will fall into line, and then goes and does whatever he wants to do, including stonewalling your integration efforts. 

Here is how I view this issue: Your company has paid a handsome price to this gentleman for the right to integrate his company into yours. He is confusing his employment with your company with his board position, and using that board position to bully you and your team. 

You are the CEO. There should be certain boundaries and non-negotiable rules that need to be clear as you purchase a company and merge it into yours. As an employee he needs to be aligned with your overall strategy and execute to his best ability. His performance needs to be measured based on the results of his division, as well as his “fit” into your company and its culture. 

I would enlist the board chair to work with you and put in writing the expectations that you and the company have for him. It will be impossible to produce the results you want to until you resolve this issue.

Q: I just found out that an employee we dismissed a few months ago committed suicide. I feel terrible. What should I do?

A: I can understand how this might make you feel terrible. 

First, I would let everyone in the company know that their former colleague committed suicide.  Let them know that you will make counselors available. You should plan to attend the funeral since this employee had worked for your company for a number of years. You might also want to see a professional if you feel some level of responsibility regarding the death. 

Finally, you talked with me about the process you used to come to the decision to separate them from your company. It’s never easy firing someone, but you spent several years working with this individual in an attempt to help them keep their position. Obviously this individual had serious mental health issues, which you encouraged them to address. It’s OK to grieve, just don’t shoulder the blame.

John Dame – Submitted

John Dame is a CEO coach, executive team consultant and leadership strategist based in Susquehanna Township, Pennsylvania. Visit his website at: www.johndame.com.

Guest view: Retirement plans should be piece of M&A puzzle

2018 was a banner year for mergers and acquisitions. Global M&A activity was the second highest on record, with deals totaling $2.72 trillion. Looking ahead, 76 percent of top executives at U.S. companies expect to close more deals this year than last, and a majority predict these deals will be larger, according to a report from Axios. These companies, and others around the globe, turn to M&A deals to increase market share and improve their business models.

Throughout the M&A process, executives are hyper-focused on company synergies and big-picture goals. As a result, one very important factor often goes overlooked – the employer’s retirement plans. There are many details to consider when acquiring a company. Understanding the seller’s retirement plan and how it will fit within the current benefit structure is vital to success.

If retirement plans are not considered upfront, executives may learn that the acquired company has an underfunded pension plan – which can be a deal breaker – or that the seller’s 401(k) plan does not meet compliance standards.

So, if you’re planning a merger or acquisition, consider the retirement plans now to avoid a headache later on.

If the transaction is a stock acquisition – where the buyer takes full ownership of the selling company – the buyer then assumes all of the seller’s liabilities, including its retirement plan. The buyer has three options for how to handle the acquired company’s retirement plan. It can either maintain its own plan and the seller’s plan separately, terminate the seller’s plan, or merge the seller’s plan into its own plan.

If the buyer decides to maintain both plans, the newly acquired employees can either be offered the same benefits they had previously, or a new formula for their employer benefits. Maintaining both plans can provide employees continuity of benefits with no impact to the buyer’s retirement plan. However, operating multiple plans can be burdensome and expensive, and nondiscrimination testing is needed if employees are receiving different benefit packages.

If the buyer is going to terminate the seller’s plan, this decision should be made and the process initiated before the companies merge. If the acquired company’s 401(k) is terminated after the transaction, the seller’s employees will face a one-year restriction before being able to join the buyer’s 401(k) plan, losing out on a full year of tax-efficient savings and employer contributions.

The main advantages of termination are that employees can be integrated into the buyer’s plan with one benefit structure for all; there is only one plan to maintain; and the risk of any liability transfer into the buyer’s existing plan is avoided. The downside is that the employee accounts become immediately accessible. So, if not rolled over into an IRA or other retirement plan, employees could squander retirement assets and face penalty taxes for early distribution.

The final option – merging the seller’s and buyer’s plans – requires that both plans be the same type and have a similar plan design. This option can be efficient and cost-effective – one benefit structure, one plan to operate – and it also avoids the negatives of plan termination.

The risk associated with merging are the unknown factors of the seller’s plan. Has it always operated in compliance with all the complex rules associated with retirement plans? If not, the buyer’s plan would be at risk.

Before deciding how to handle the seller’s retirement plan, the buyer will need to perform exhaustive due diligence. This includes confirming past operational and procedural compliance, making sure all plan documents are up-to-date, and confirming general compatibility between the plans. Examples include reviewing nondiscrimination testing results from recent years, the seller’s fiduciary oversight practices, administrative operations such as distributions, payroll and loan processes, and fulfillment of government reporting requirements.

Many companies partner with an outside consultant to conduct a thorough benefit plan review and help determine the best option. When experts are engaged from the start, they can help ensure the transition is smooth and employees have a clear understanding of the benefits with their new employer.

An organization’s retirement plan should be a consideration from the early stages of an M&A. Though the evaluation process can be lengthy, it’s better to anticipate issues that could arise, instead of realizing them in the midst of the merger when it might be too late.

John Jeffrey is a consulting actuary, specializing in retirement plan consulting and post-employment health care benefits, for Conrad Siegel, which is based in Susquehanna Township, Dauphin County.

A Conversation With: Andrew Barninger

Photo: Submitted

Andrew Barninger, 30, joined Personal Wealth Advisory in 2013 and was recently named partner. He will be involved in launching NextPhase, which will focus on business transition planning.

Barninger has a bachelor’s degree in finance, economics and accounting from Mercyhurst University. He also is a certified financial planner.

He and his wife, Leah, and their month-old son live in Manheim Township.

Q: Tell us about NextPhase and the role you will take in launching it.

A: We’d been doing more financial planning and business transition work for Lancaster County small-business owners, and it’s a really unique and specialized area of planning. What we wanted to do was break off a subsidiary from Personal Wealth Advisory, which led to NextPhase Business Planning, which is going to focus on the transition planning needs of small-business owners, helping them achieve what they want, whether that is selling the business or keeping it in the family, or they want to work five or 10 more years or they want less day-to-day responsibilities.

What are some of the challenges businesses face as they start transition planning?

The main challenge we see over and over is that transition planning doesn’t happen early enough, so a business owner will come to us and say, I’d like to no longer own this business or work in it in two years. The perception is, that’s plenty of time to make this happen, but often we’re looking at five-plus years of work and strategic planning to make that transition as smooth as possible. Time is the most valuable resource in transition planning, especially if the sale proceeds the owner will eventually get are important for their long-term financial future.

Lancaster County has so many small businesses that are family-owned, and what business owners don’t realize is the next generation might have no idea how to do what the owner does on a day-to-day basis, so it’s not just figuring out how to change ownership but it’s also how that next generation is going to pay for it, how they are going to be trained to do what the owner does on a daily basis. That all takes a lot of time, because they also have to run their business and keep it profitable. Often the owners don’t start the planning process until there’s a bit of a time crunch or a health event or some catalyst.

Why do you enjoy providing financial education sessions for local associations and businesses?

I think they’re fun because it gives a platform for these business owners to take a step back from their day-to-day roles and think big picture, think long term, which sometimes are not luxuries they have in their work. I always think it’s enjoyable to help people, to challenge them to set that time aside and think more about themselves, about the business at a higher level, and take off whatever hat they’re wearing and ask themselves some critical questions about what makes them happy, what their ideal future looks like, and get the information they need and hear other people who are in a similar situation ask questions and talk about what they’re experiencing.

What’s on your summer activity list?

My wife and I just had our first baby in the first week of April, so if you’d asked me that 10 months ago I’d have had a different answer. Our activity list includes whatever our little guy is going to allow us to do, hopefully taking him to some fun places and watching him develop. My wife’s family lives in Pittsburgh, so we’ll be taking lots of trips, I’m sure, and having family come in and visit.