by Ready or not, some day it will all come to an end. There will be no more sunrises, no minutes, hours, or days. All the things you collected, whether treasured or forgotten, will pass to someone else. Your wealth, fame, and temporal power will shrivel to irrelevance. It will not matter what you owned or what you were owed. Your grudges, resentments, frustrations, and jealousies will finally disappear. What Will Matter by Michael Josephson.
Sumner Redstone at 93 has a problem. As his health continues to deteriorate, there is an inside battle for his $40 billion empire which includes the likes of CBS television network and Viacom. You got it. Sumner is late to the game in planning his succession plan. Turns out Mr. Redstone is not alone. 2/3 of business owners lack a succession plan.
According to U.S. Trust Insights on Wealth and Worth Survey, business owners want a strategy to maximize the value of their company, and want to create continuity beyond the current owner. The following are the personal values recorded in the survey.
1- Defining a life well lived:
- Financial security
- Giving back
2- Planning for a life well lived:
- Growing and preserving wealth
- Family wealth and transfer
- Longevity planning
- Role of advisors
3- Spotlight: Business owners and executives
- Only 40% of business owners have a formal plan for the orderly succession of their business.
- Women, Millennials and the wealthiest business owners are most likely to have a succession plan.
- The vast majority (89%) of those who have a succession plan also have a will and/or comprehensive estate plan in place.
This survey summarizes the problem. From the level of one’s personal values, growing and preserving wealth across multiple generations is important. It’s interesting to note that those that do have a succession plan in place, are also more likely to have there estate planning up to date.
There are a few music retailers who get it right.
Pat Averwater, CEO of Amro Music, recently shared his thoughts on getting family employment right with his “agreement for family employment.” with me on the topic of succession planning.
The arrangement with children who might want to enter the business is as follows: For the first ten years of work at Amro after college, a family member receives compensation consistent with what they would make for similar work outside the company. After working in the business for ten years after college, the family member becomes an officer of the corporation and participates in the splitting of officer salaries. The amount for officers’ salaries is split in the ratio of 58% for the senior corporate officer and 42% for the junior officer, there normally being about 10 years difference in experience between the senior and the junior officer. (In a case in which a family member chooses not to finish college, two years work at Amro could be considered the equivalent of one year of college. Thus a person who began work at Amro at 18 instead of going to college, would become an officer at age 36; had he finished college at 22, he would become an officer at age 32.)
Each family member bears the obligation of maintaining a high standard of responsibility and ethics inside and outside the business. Any actions or events that reflect poorly on family or company values could result in employment termination.
Tim Pratt is President and one of two owners of Dietze Music. Tim is not unlike his predecessor and the patriach of Dietze Music, August Dietze, who opened Dietze music in 1927.
It was more than just a music store. It was a scene, it was a place for us. It let a lot of us do this for a living. From Boxcar Willie, who taught lessons there in the 1950’s, to others who found their start at Dietze Music. Dietze Music continues to attract the best and the brightest and in 2013 was named Retailer of the Year by the Nebraska Retail Federation. The award cited the long Nebraska history of Dietze Music, their dedication to music for young people and their ability to adapt to rapid changes in the retail industry.
So there you have it. Most CEOs are not taking care of business, but here are two music retailers who get it right and worth learning from.