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Bradford Financial Center, a national wealth management company, delivers a financial advisor's simple approach to making small changes that can result in big results for your financial future. From budgeting, tax planning, and saving for retirement to college planning, smarter insurance solutions, and building wealth, the practical advice is easy to apply for investors at any level.
All episodes include a "Five in Five" segment where we break down quick-hit financial trends for their listeners.
0:00:02.2 Speaker 1: Welcome to Your Wealth Journey podcast powered by Bradford Financial Center, where we'll always share how small changes equal big results because your wealth journey is our focus.
0:00:13.7 Shallon Weis: Welcome back to the Your Wealth Journey podcast produced by Bradford Financial Center. And I'm Shallon Weiss, a financial advisor for Bradford with offices in Clarion and Garner, Iowa. We're proud to serve the heart of America and share insights that help you chart your own financial journey.
0:00:30.7 Jim Tausz: And I'm Jim Tausz, president of the Bradford with over 50 years of financial planning experience. We're very glad that you're with us today.
0:00:40.5 Shallon Weis: Today we're tackling a topic that can be both exciting and a little stressful. Family business succession planning. This is one of those areas where so many families get stuck because it's about more than just the numbers. It's about people, relationships and planning for the long haul.
0:00:56.9 Jim Tausz: Exactly. And we'll talk through some of the common pitfalls, what you can do to avoid them, and then stick around until the end of our five in five segment. We're going to spotlight the five practical tips for preparing a solid succession planning strategy. It'll be worth your time.
0:01:16.3 Shallon Weis: So Jim, let's start with the basics. Why is succession planning so critical?
0:01:21.1 Jim Tausz: Well, Shallon, it's a pretty simple theory. Every business owner eventually wants their business continue thriving. That's natural. But in practice, the statistics are actually quite startling. Studies show that only about 30% of the family businesses survive into the second generation and even fewer make it to the third. I can speak to that personally. I've been at the helm of this company, Bradford Financial Center, for over 50 years. And during this time I've seen plenty of businesses struggle simply because there wasn't a plan in place for what happens next. Early on, my family and I made the conscious decision to think long term, not just about growing the company, but about how to preserve its legacy for the next generation. That didn't mean that I was thinking about retiring tomorrow either. It was about actually building a system, mentoring future leaders and putting structures in place so the business could thrive whether it was in a day to day or not. We worked on the governance, the clarified roles. We made sure that the ownership transitions could happen smoothly when and if needed. So when I talk about succession planning, I'm not just talking theory. We've lived it. Having a plan in place that's going to remove the uncertainty is worth your while. It protects the business. It ensures that your hard work continues to benefit your family, all your employees as well, and of course the community for years to come.
0:03:01.8 Shallon Weis: And that's huge. And usually it's not because the business itself isn't profitable. It's often because of a lack of planning, unclear roles, or family disagreements. And that can create stress, uncertainty and even financial risk.
0:03:16.6 Jim Tausz: Right Shallon and planning early gives you options. It allows you to transfer ownership and also the leadership gradually better the next generation for a good result in the end game and put structures in place so that everyone knows what to expect.
0:03:34.5 Shallon Weis: So let's talk about some of the common pitfalls that we see. Number one is assuming that family members will automatically want to take over.
0:03:43.6 Jim Tausz: Exactly. Just because someone grew up in the business doesn't mean that they have the passion, the skills, or even the interest to run it. That's why part of succession planning is really having an honest conversation with everyone early on about who is going to be ready and who is going to be interested in taking over your place someday.
0:04:06.6 Shallon Weis: Another common issue is mixing family dynamics with business decisions. It's easy for emotions to drive decisions which can lead to conflict or resentment if roles and responsibilities are not clearly defined.
0:04:20.1 Jim Tausz: And don't forget about the if the ownership transfer isn't structured carefully, it can trigger unexpected tax bills that you're not going to like at all, or even create liquidity problems that jeopardize the business for many, many decades to come.
0:04:35.8 Shallon Weis: And finally, waiting too long to plan. The best succession plans are long term. They're built over years, not months. Waiting until retirement is around the corner often leads to rushed decisions and missed opportunities.
0:04:48.6 Jim Tausz: So how do families avoid these common pitfalls, you might ask? Well, first, you start early. Begin the conversations about succession while there's plenty of time to mentor the next generation and to shape the plan that's going to work for everyone's best interest and consequently your family's best interest especially.
0:05:11.3 Shallon Weis: Second, involve professional advisors, financial planners, CPAs and attorneys early in the process. They can help structure ownership transfers, minimize taxes, and guide conversations in a neutral, practical way.
0:05:26.4 Jim Tausz: And third, create a clear governance and roles, decide who's going to make which decisions and the conflicts, how they're going to be resolved, and how the profits and the equity are going to be shared within that company. Writing it down, formulizing it reduces many misunderstandings that could come up and down the road and you don't want to create chaos. This is a plan that's going to work.
0:05:52.5 Shallon Weis: And don't forget to include contingencies. Life happens, illness, divorce, or an unexpected events can all impact your plan. Thinking through the what ifs now prevents major headaches later.
0:06:06.6 Jim Tausz: Finally, ladies and gentlemen, make sure you keep the lines of communication open. Regular family meetings need to be held. Reviews of the plan and updates as the business grows are very crucial and critical too. Also, succession planning is a living process, not a one time document by any means.
0:06:33.3 Speaker 1: In our last five minutes, we'll bring listeners a roundup of five smart ideas they can apply to their own wealth journeys. So let's get started with this episode's five and five.
0:06:46.0 Shallon Weis: All right, it's time for our five and five where we share five quick and actionable insights in five minutes or less.
0:06:52.6 Jim Tausz: Today, focus is going to be five practical tips for preparing a family business succession plan.
0:07:00.1 Shallon Weis: Number one, start early. Don't wait until the end is near. Give yourself time to mentor the next generation, test leadership skills and make gradual ownership transfers.
0:07:11.6 Jim Tausz: Number two, clarify roles and expectations. Define who's responsible for what, who has the decision making authority and how the conflicts are going to be handled as they come down the road. Write it down, make it formal and review it regularly. Don't let it just sit there. It's a living document.
0:07:32.7 Shallon Weis: And number three, address taxes and liquidity. Make sure your plan considers estate taxes, gift taxes, and the cash that your heirs may need and to pay taxes without selling off assets or the business itself.
0:07:45.4 Jim Tausz: Number four, involve neutral advisors. You need CPAs, attorneys, certified financial planners that can guide the family discussions. Also structure transfers efficiently and help avoid emotional decisions that might harm the business in years to come. Think short term, medium term and long term. It's all one big process.
0:08:10.5 Shallon Weis: Number five, plan for contingencies. Life is unpredictable and make sure your plan accounts for unexpected events like illness, divorce or changes in interest or capability of successors so the business can continue smoothly.
0:08:25.6 Jim Tausz: Those five steps actually give you a roadmap to avoid the common pitfalls that many people see out there and also people don't see. You need to build that succession plan that's suited to you and actually works in the long term for you and the rest of the family's best interest.
0:08:44.8 Shallon Weis: Succession planning isn't just about passing on a business. It's about leaving a legacy, protecting your family and ensuring the hard work you've put in over the years continues to thrive.
0:08:55.2 Jim Tausz: Look, you gotta start early. Involve those professionals we talked about. Communicate clearly and build in the flexibility so that you can move as the situation needs movement. And be sure the plan is a thoughtful plan today that's going to prevent conflict now and in the future. And I stress tomorrow because tomorrow is as important as today. Because remember, this is one big plan that's going to make a difference for many years to come.
0:09:29.0 Shallon Weis: Thanks for joining us on Your Wealth Journey Podcast. If you want to learn more about family business succession planning or talk through your own strategy, reach out to us at Bradford Financial Center.
0:09:40.6 Jim Tausz: Until then, take care and enjoy the journey.
0:09:46.4 Speaker 1: Thank you for tuning in to Your Wealth Journey Podcast, powered by Bradford Financial Center. Be sure to tune in to our next episode where we'll continue to explore the smart financial strategies you need to know. Securities are offered through United Planners Financial Services Member FINRA Member SIPC, Advisory services are offered through Bradford Financial Center, a registered investment advisor. Insurance services are offered through Bradford Insurance. Tax and accounting services are offered through Bradford Tax and Accounting Network. Bradford Financial Center, Bradford Insurance and Bradford Tax Accounting Network are not affiliated with United Planners. Neither Bradford Financial Center nor United Planners provide tax or legal advice. This podcast is for general information and educational purposes only and is not intended to be specific advice for any individual. Consult your financial professional regarding your personal situation. All investing involves risk and there's no guarantee that any strategy will be successful.