CEOs are not easily replaceable and supply is lacking.
Where does the time go? When you enjoy a great meal, a terrific movie, a memorable vacation, a wonderful romance or a successful project, time flies. However, good times or bad, time passes quickly.
It seems like just yesterday I was a teenager hot-rodding around in my ‘55 Chevy and had all of the time in the world and truly did. Children and young people do not understand the phrase, but as we age, it is more and more accurate. Fast-forward and I am now in my 60s. The past five years have been loaded with highlights and low points. The births of three wonderful grandchildren are at the top of my list of highlights. I love that part of my life. The losses of friends, clients and family members are the low points. Ugh, I never thought about these losses and about how difficult losing loved ones and friends are for each of us. So why deal with the low points when I know you would all love to read about my grandchildren?
I am realizing that I am not preparing for my future as I should be. I have many friends, including 90-year-old friends, who have not completed their end-of-life plans either. Baby boomers are retiring at the rate of 10,000 each day. If you were born in 1946, the start of the baby boom, you will turn 68 years old this year. If you were born in 1964, the end of the baby boom, you will turn 50 years old. That said, death and taxes are certainties in our lives, and we all need to prepare for both.
When my daughters were getting married, there was a convenient website, www.The Knot.com. The website contained all the considerations for planning a wedding, which can be an enormously complicated affair. It also featured a handy budget where you could insert the amount you were spending and have the site conveniently allocate your budget by area of expense.
Similarly, if you Google end of life or www.mywonderfullife.com, websites containing extensive planning checklists are available. The checklists even include what (others are) to do immediately after (your) death, how to handle funeral arrangements, and how to write the obituary. Documents to locate and a list of “Passwords” are essential to dealing with the details of a person’s affairs. These checklists are no substitute for attorneys and CPAs, but they can help you organize your thoughts and highlight all of the details that require attention.
A Plan of Action
All of your stuff and your last wishes require a plan. There is no better time than when you are healthy and coherent to complete such a plan (which, by the way, does not require the help of an attorney). You simply need to think about the people who will be dealing with your affairs and what they need to know in detail for your last requests. If you are a business owner, you may require assistance in planning your succession. But time and health are important assets to leverage, so start the process.
Your obituary is also a great starting point. Having to write one recently, my daughter and I were discussing the difficulty of not remembering all the details for the obituary and having to refer to the person’s résumé. My daughter asked about my obituary and I laughed. I said she would have to deal with that, and then she asked for a copy of my résumé….
I am feeling a sense of urgency around the finality of life and not in a morbid or depressing way. I just think I can do a better job of organizing my life so that when, not if, something happens, my family knows what I was thinking and desiring. If you are like me, there is work that needs to be done to get things in order. We owe this to our family, friends, employees and stakeholders. I am pushing forward to create my own checklist and communicate all this to my family.
The business affairs are not the only matters that become onerous for the survivors. Someone has to deal with all your belongings (stuff) and final wishes. What were your final wishes? Pick the most complicated and personal area of your life and imagine someone picking this up without any clue as to what you were doing or thinking. While you may have loved all those worldly possessions, you did not take them with you. So in spite of what you thought, someone else is now dealing with your stuff. George Carlin has a wonderful comedy routine on “our stuff.” If you are a George Carlin fan, visit YouTube and search for “George Carlin Stuff” to watch his standup routine.
What instructions should you leave for all the worldly treasures you have? In my case, I have several matters that my family may not be able to manage effectively. What should they do with all of my fishing and camping stuff? They will happily get rid of my motorcycle, I am sure. Even if you donate your body to science, they will cremate your remains and the family receives the ashes. Where and how would you want those ashes spread? There is just no good reason to leave all of these issues for your family without a specific plan or recommendation. Take the time to talk with your family and write down your thoughts.
Creating a Succession Plan
Our firm focuses on Ownership Transfer and Management Succession (OTMS) for family-owned or privately owned construction and engineering businesses. FMI believes that the ownership and management of the construction business should have a well-planned strategy for continuity. Many loyal employees and other stakeholders depend on the company for their livelihood, so that continuity challenge affects them and their families too.
Accidents and illnesses are taking their toll on baby boomers at an increasing rate. Despite our best effort, we are seeing situations where the owner of a company has passed away and the spouse or children of the owner, who were not involved in the business, are suddenly leading the company. These individuals are unprepared and ill-equipped to manage the risk and complexity of a construction company, which results in difficult situations for families, employees and stakeholders.
We baby boomers believe we are going to live forever and have all the time in the world to get ready. Management succession in any construction company is complex and requires time to execute. There is not an abundant supply of CEOs or professional “Caretakers” for construction companies. CEOs are not easily replaceable. CEOs also have concerns about their roles after their successor is hired. How to remain productive when the right person is recruited for their job is a valid concern. Waiting until the final year or two before retirement and hiring a successor is a risky proposition. What will you do if your first choice of a CEO fails? You now start over from square one. Is it time yet?
Ownership transfer is a significant challenge as well. Who will own the company, and is he or she equipped to manage and control the risk of the construction business? Is someone internally financially able to make the purchase? Financing the purchase is a risky proposition that most sellers prefer not to take. In addition, FMI advocates that this is not a business for absentee owners due to the risks involved. Purposefully planning out the ownership transition to mitigate risk and provide for continuity is a complex task and outside of the scope of this article. Yet many owners are in the mid- to late-60s without such a plan for ownership continuity. Will a non-construction experienced executor of the estate have the competence to manage this difficult task? This is a very weak strategy.
All of us should have a sense of urgency around these issues now. It is time for us to wake up and deal with the reality of where we are and leave specific instructions for our desires should we meet with an untimely death or incapacitating illness. It can and does happen all too often. Q
Ken Roper is a principal with FMI Corporation. He can be reached at 303.398.7218 or via email at email@example.com.