Who Wants to Be a Leader?
Do you have a specific career vision of becoming a company leader in the horticulture industry someday? Are you working on adding professional skill sets to enable you to take on C-level or leadership-level roles? As a company, have you invested in a definitive training and development program aimed at developing your next leaders? There is a leadership void in the horticultural industry that will critically need more leaders now and progressively into the future. The number of retirements occurring in the green industry is staggering. Did you know there are over 100 owners of green industry companies retiring soon who have no clear leader to succeed them? Per the USDA, in 2024, the average age of all agricultural producers is 58.1 years, and those over age 65 constitute 40% of the total. As an industry, we endured a period with historically low numbers of students and professionals interested in pursuing a green industry career. This period has created a talent gap in the upcoming generations, especially Gen X. The small number of professionals in this group are talented and knowledgeable. Still, it is merely a matter of supply and demand. There are not enough leaders to take over, and not enough professionals have been provided leadership training. Throughout every sector, demographic, and role in the green industry, there are fewer individuals who have a specific desire and career focus to lead a company. Compare this to the financial or software sectors, where a high volume of professionals have an early passion and focus on driving their careers to the top leadership roles in their industry. It is surprising how small the number of professionals in our industry is who are adequately prepared or willing to be a leader in their company. A dynamic affecting this is the sheer number of family-held companies where leadership has traditionally been passed to second or third generations. While this is admirable, it has also tempered the career aspirations of those not part of the family. We are now at a tipping point where there are fewer generations to pass leadership roles to, causing new and challenging exit planning options for the current leaders. A Mutual Effort Question: How do we address this predicament? Answer: From the mutual effort of individuals and companies. Encourage students and early career professionals to dream big and envision being a company leader. Leadership is not for everyone, provided all the responsibilities and challenges that come with it. However, we need more professionals who genuinely want to take on significant leadership roles with a company. Ask yourself— Have you allowed yourself to dream about this type of role? To have more leaders, we need more professionals who desire to take on a role of this level. With that desire comes the awareness that one must embrace continual learning with curiosity and accept certain sacrifices required to drive one’s career to a top leadership level. This could include putting in longer hours, the ability to relocate, and volunteering to take on new tasks or help in other departments when they are shorthanded. Professionals open to relocating for roles will indeed advance their careers faster! Academically, technical knowledge of plant science-related academia is essential. Yet infusing business knowledge is equally, if not more, important in developing future leaders. We have many excellent educational institutions producing knowledgeable students. Increasing the focus of these academic programs on developing leadership with curricula geared to business and management will provide a business base and inspire more students to do so. For example, we rightly celebrate our grower interns, but we should also celebrate those doing horticulture industry internships in sales, marketing, accounting, or human resources. Have a Plan If you want to lead a company, division, or department someday, identify within yourself the knowledge and skill sets needed to get there. Proactively take charge of gaining the knowledge and experience you lack rather than relying on others. There is just as much onus on companies to be a part of increased leadership development. This does require an investment in both money and time to be successful. Begin to balance your team’s professional development budget with your automation budget. No matter how automized, it still takes strong professionals leading from the front for a company to realize success. Many assessment tools, such as CliftonStrengths, DISC, and Myers-Briggs, are available to help a company identify individuals with future leadership behaviors. These tools will help craft a career plan to infuse them with the skill sets needed to be strong leaders. Does your company have career development planning that includes rotating top talent through different departments or functions? Companies that rotate talent through various departments produce the strongest leadership pipeline. At the very least, does the company invest in continual education or training programs focused on improving communication, soft skills, sales, marketing, financial, operations, or supply chain knowledge? Encourage and support these professionals to become active within the industry via associations, seminars, or other educational and networking events. Don’t be afraid of losing this talent to industry exposure. Several leadership programs have been developed specifically for our industry, such as Dr. Charlie Hall’s Texas A&M EAGL program and the HRI Leadership Academy. Professionals who know their company invests fully in their employee’s growth are much less likely to leave. Employees feeling stifled in their development will leap at the opportunity for growth elsewhere. Investing in the Future No company has an endless budget, but a company can apply strategies that do not require a monetary investment, such as transparency in your business and delegation of responsibilities. Openness with your employees about all facets of the business directly correlates to increasing their professional growth. For example, companies applying the “Great Game of Business” approach to transparency have more engaged, business savvy, and motivated employees concerning their career progression. Pairing high-potential employees with positive mentors will also benefit the mentors themselves by increasing organizational talent strength. Encourage delegating responsibilities and not micro-managing those who are assigned tasks. This must
BEST Receives the Certified Value Builder™ Designation
BEST invests in current and future business owner clients with the addition of a Certified Value Builder™ (CVB) Designation BEST keeps getting better – BEST Human Capital & Advisory Group proudly announces that Managing Partner Chris Cimaglio, CEPA, has earned and received the respected Certified Value Builder™ (CVB) designation from The Value Builder System™. Chris now joins an international community of trained business advisors, which incorporates the world’s leading thinkers in building value in companies for their owners and stakeholders. Chris earned his designation as a Certified Value Builder™ to support our clients’ transition goals and maximize the value of their businesses. According to The Exit Planning Institute, 76% of business owners plan to exit their business in the next ten years, and many will turn to an advisor for help. For the last four years, BEST has become very involved in the succession and exit planning process to better prepare its clients for the eventual leadership transition of their business. It was a natural extension of their Executive Search services. Many owners came to BEST looking for successors to lower their company’s dependence on themselves and assist with leadership and family succession. Other engagements arose from BEST’s HR Advisory services. BEST has now integrated The Value Builder System™ into its strategic advisory services for small and midsize business owners and CEOs. The Value Builder System™ incorporates several diagnostic tools, including the Value Builder Score, an evaluation system driven by an algorithm that evaluates a business on the eight core values acquirers consider when buying companies. The Value Builder Score provides a comprehensive assessment of the “Sellability” of your business, whether you want to sell next year or to know that you’re building a valuable asset for the future. As CEPAs and Certified Value Builders, our team is qualified to interpret your Value Builder Score. Those businesses that achieve a Value Builder Score of 90 or greater are worth double the average-performing company. In our Succession & Exit Planning Advisory at BEST, our mission is to dramatically increase your business’s value, anticipating a future sale or inevitable ownership transition. After completing a Value Builder Assessment, a confidential report measures the owner’s readiness. The report provides a process for the organization to achieve full value before selling a business. The “Sellability” of your company is not determined by the owner, your revenue, or your impressive list of customers. The buyer determines it. The Value Builder Score is based on eight factors that make a company attractive to buyers and maximize what a buyer is willing to offer. Sound like something you want to know? Then let’s get started. The single largest transaction and transition of your life deserves special attention. At BEST Human Capital and Advisory Group, we are committed to helping our business-owning clients succeed in their business and personal lives. Unfortunately, we see clients working so hard in their companies, and too many owners delaying their happiness and financial savings. Many do not have family interested in the business, which brings the question of succession planning when there is no succession? Many owners arrive at the end of their careers and find out the company is not positioned nor ready to successfully transfer to a new owner. As a result, these owners missed the opportunity to grow transferable value. On the flip side, BEST has also experienced working with owners who try to handle the business transition by themselves, which usually leaves money on the table and leads to regret.
Taking the BEST Exit and Succession Planning to a New Level for You
BEST invests in current and future business owner clients with the addition of a CEPA Designation BEST keeps getting better – BEST Human Capital & Advisory Group is proud to announce that Chris Cimaglio, a Managing Partner, recently earned the Certified Exit Planning Advisor (CEPA) designation after completing the Exit Planning Institute’s (EPI) intensive executive MBA-style program. For the last four years, BEST has become very involved in the succession and exit planning process to better prepare their clients for the eventual leadership transition of their business. It was a natural extension of their Executive Search services as many owners came to BEST looking for successors and to lower their company’s dependence on them and assist with leadership and family succession. Other engagements arose from BEST’s HR Advisory services. After training and partnering with the ExitMap® and BizEquity®, this has become a growing part of BEST’s clients’ needs. After publishing several articles on the topic and speaking at major industry events, Chris decided to complete the Certified Exit Planning Advisor (CEPA) Program through the Exit Planning Institute (EPI) to serve these growing needs better. If you aren’t familiar, the CEPA Program is the most widely accepted and endorsed exit planning program in the world, focused on cross-functional consulting and value acceleration. As a CEPA, Chris belongs to a multi-disciplinary network of high caliber, collaborative advisors in our area and across the globe. According to Chris, “This is personal for me, and I am passionate about it. I grew up in a family business and have worked with hundreds of them throughout my career. I have seen succession and exit plans work well, and others fail miserably. As a CEPA, we can now apply tested methods and approaches to change the outcome for these owners. We can do it together, collaboratively, and offer a more holistic program that helps business owners maximize the value of their business and personal financial plans to the next level and be prepared for what adventure comes next after they exit their company.” There is one indisputable fact – 100% of owners eventually will exit their business. It could be through family succession, sale, liquidation, closure, death, or any number of reasons – many of which are outside the owner’s control. According to an EPI report, over 75% of business owners who have sold their business profoundly regret it within a year after the sale. 50% of exits will be involuntary, and 40% of business owners lack even a basic business continuity plan should something happen to the owner (death, disability, divorce, or illness). BEST Human Capital and Advisory Group is committed to helping their business-owning clients succeed in their business and personal lives. They see clients working hard in their companies and too many owners delaying their own personal happiness and financial savings. Many do not have family interested in the business, which brings the question of succession planning when there is no succession? Many owners arrive at the end of their career and find out the business is not positioned nor ready to successfully transfer to a new owner. These owners missed the opportunity to grow transferable value. On the flip side, BEST has also experienced working with owners who try to handle the business transition by themselves, which usually leaves money on the table and leads to regret. We know in our hearts that it doesn’t have to be that way. The single largest transaction and transition of your life deserves special attention. Are you planning to exit and sell your business? Business Exit planning is quickly becoming a buzzword in the legal and financial communities. Your professional advisors position themselves to provide tax, risk management, wealth management, and contract preparation services. BEST Exit Plan Advisor has been trained to manage your team of tax, legal, business, and financial planners to navigate your exit strategy. Click here for our Special Section on Exit Planning for more details and a video on how to get started. If you want to see how prepared you are for transition, take the 15-minute Assessment at no charge: There is one indisputable fact – 100% of owners will eventually exit their business. The Assessment is a multiple-choice questionnaire that does not ask for confidential or financial information. Nevertheless, it is a critical first step in starting the discussion and planning process. Click here for FAQs and more information concerning our free, no-obligation exit planning assessment.
Business Succession Planning When There is No Succession
Insights into Preparing for the Business Transition and Transaction of Your Life The phone call was a jolt and shook us to our core. Tragically, we received news that a grower we had met during our Succession/Exit Planning Seminar at Cultivate ’21 in July was killed in a car accident. He was a good man, who had built a fine operation, but the business was highly owner-centric – everything passed through him. He had no accountant, lawyer, financial planner, or exit plan advisor and certainly no business continuity plan. We had a few discussions with him after the Seminar, but he had put things on hold. Now a strategic partner of ours is helping the family, amidst their grief, with the disposition of the business. Unfortunately, there is a long and challenging road ahead. There is one indisputable fact – 100% of owners eventually will exit their business. It could be through family succession, sale, liquidation, closure, death, or any number of reasons – many of which are outside the owner’s control. According to the Exit Planning Institute (EPI), 50% of exits will be involuntary, and 40% of business owners lack even a basic business continuity plan should something happen to the owner (death, disability, divorce, or illness). Suppose there is no family to take over the reins? In that case, the logical choices are to transition the business to new leadership and/or your employees (often through an Employee Stock Ownership Program, or ESOP), sell the business outright (to an investor, competitor, or investment group), or close up shop and liquidate. Since a company can often represent about 80% of an owner’s net worth, we will address the more wealth-saving and positive options of transitioning and/or selling the business. 48% of business owners don’t know how or have even thought of preparing for the sale of their company (PWC Family Business Survey). We have found that the best business transitions begin early and have a team of people working in tandem to maximize the value of the business and get you and your business transition ready. The Challenges “If you fail to plan, you are planning to fail!” – Benjamin Franklin The numbers are staggering. 10,000 Baby Boomers hit retirement age every day, and 60% of all business owners are over age 55. Yet, according to EPI, PNC Bank, and Kent State surveys, 80% of business owners have no transition plan or have not documented or communicated a succession plan. Furthermore, 80% of these businesses are not saleable, nor do they have a proper talent or family pipeline to continue. Of the remaining 20% sold, 12% will be lower than the original asking price. Even though 98% of business owners feel that succession planning is essential, they rarely have a plan. When they do have a plan, there are several reasons why they fail: Many think it is unimportant and choose to focus on the transition rather than the transactional nature of a business. Potential future leaders and family leave the company looking for greener pastures. As a result, owners do not adhere to the plan and stay long past their expected departure date. New leaders are ill-prepared to take over or do not perform to the level of the original owner. A focus on the past or a mindset fixed on “this is the way it has always been done” not only cripples future leadership but puts the future of the business in jeopardy. Time, lack of commitment, and fear. Successful Succession Planning = Transition Ready Not all hope is lost. We have been a part of many business succession and exit plans that have been and continue to be successful. We begin with an assessment and evaluation of four critical areas of personal and business transition readiness that have a direct impact on value from an investor’s perspective and the questions they will be asking: Financial Preparedness: Valuation of the business and industry comparisons, reviewing financial metrics (ratios, receivables, banking situation, and overall financial health), and the tax impact— on the owner and the business. Is the company operating at a high level and doing more with less? Planning Preparedness: Review potential buyers, professional advisors (accountant, lawyer, financial planner, exit plan advisory, and broker), business continuity planning, and addressing owner centricity. Can the business operate independently of the owner? An owner with all the key relationships and is responsible for most of the sales, especially to larger customers, can be an issue. Are customer relationships spread out among your staff? Workaholics, who are in their operations 7-days a week and micromanage their businesses, are bad bets for a potential buyer. If the owner should suddenly leave or pass away, how easy would it be to transition to new leadership or potentially sell the business for a high return? Revenue and Profit Preparedness: Consistent sales and profits— The ability to drive revenue but not at the expense of margin. New product/service offerings, new markets, diversification, and those elements of your operation that deliver consistent sales and profitable results. The presence of recurring revenue is also important (long-term contracts, vendor agreements, and leases). Bankability— Are there well-prepared financials and key performance metrics with predictable and reliable cash flow? Operations Preparedness: Do you have up-to-date modernized systems, and are your processes and procedures efficient? Is information readily available? Review management, systems, technology, standard operating procedures, and operational efficiencies. Are you staying on top of trends? Website, eCommerce, email lists, social media are all critical. Are there efficient processes and procedures in place that can be easily managed and communicated? The next step is to optimize and accelerate the value of the business before a sale or transition and understand that effective succession planning is more than just transitioning to new leadership. It is a process that could take several years, so it is never too early to get started. There are transactional components at work as well. Owners need to take an objective investor’s approach to their business— Is the risk at a low level, and is there a potentially high ROI? Addressing
The Missing Employees
Are you missing employees? Where did they go? I just got off the phone with a restaurant owner who temporarily closed one of his locations so that he could redistribute the staff to the other three. I’ve also heard or seen in the last week: A Starbucks closing at 4:00 PM for lack of staff. A director in a large accounting firm reporting that two pay raises in 9 months (for remote employees) are being characterized by the 30-something accountants as “non-competitive.” Apple employees publishing an internal letter saying the company’s plan to require 3 days a week attendance is “unacceptable.” A wire service story noting that only 12% of office workers in Manhattan have returned to their offices. The manager of a new restaurant scheduling 27 interviews, then sitting through 26 no-shows. Wait times for services businesses that are are unworkable for customers. Our tree trimmer offered me a date 4 months out. The pool contractor’s backlog is seven months. Both claimed insufficient crews to handle the business. I talk to at least a dozen employers a week, and all are complaining about the lack of qualified applicants. Several have raised their starting wage rates multiple times, with no discernable change in the flow of applicants. What the hell is going on? To start, I don’t believe that it’s all the fault of supplementary unemployment benefits. It is true that the states which discontinued the supplements have somewhat lower unemployment rates, and that $300 a week is enough to entice a $10/hour employee, but the missing employees are across the wage range. Factors Driving the Shortage and Wageflation One fact is that the economic rebound since 2009 has not previously had much impact on wages. They were bound to catch up at some point. The Federal Minimum Wage of $7.25 an hour is now insufficient to pay for basic apartment rent anywhere in the USA. Supplementary benefits or not, no one wants to put in 40 hours a week and not be able to live on what they earn. Another is the absorption of women into the workforce. For much of the ’80s and ’90s, women working for the first time represented a net addition to the number of available workers. This had a depressing effect on wages, as there were more bodies chasing limited jobs. The employment market has adjusted to this new normal. Remote working has frayed the cultural relationship between employers and employees. Where workers often stayed in a job because they had friends there, or were comfortable with their responsibilities, now salary is rapidly becoming the only factor they consider. The inflationary pressures of deficit spending are shrinking the buying power of static paychecks. The lessening of COVID-19 is releasing a backlog of employees who “wanted to move anyway,” but were hanging on to what security they had through the pandemic. Most importantly, over 50% of the Baby Boomers are now over 65 years old. Generation X is much smaller, so these retirements impact mid-level employees and managers the most. The available pool of experienced people is literally shrinking. Missing Employees and Exit Planning If you are one of the Baby Boomers who are now 21% of the population but still own 51% of the private companies in the U.S., missing employees will impact you in more ways than just on your daily workload. Increased labor costs will have a direct impact on profitability, and therefore valuations. The challenge of retaining employees long enough to develop true proficiency is growing. Higher turnover means you’ll need more people for the same tasks. The long-term commitment of a relationship where someone is in training to assume control of the business becomes in many cases, unimaginable to an employee. Lack of experience in a management team also detracts from enterprise value. In businesses that depend on repeat customers, relationships may need to be reestablished regularly. I saw a cartoon a few weeks ago. An owner is talking to his employees. He says “When we said you were essential workers, we didn’t mean you should be paid like essential workers.” Perhaps they can be forgiven for misunderstanding. In our mission statements, we often say that employees are our most important asset. It looks like we may have to put our money where our mouth is. John F. Dini, CExP, CEPA is an exit planning coach and the President of MPN Incorporated in San Antonio, Texas. He is the publisher of Awake at 2 o’clock and has authored three books on business ownership. The single largest transaction and transition of your life deserves special attention. Are you planning to exit and sell your business? Business Exit planning is quickly becoming a buzzword in the legal and financial communities. Your professional advisors position themselves to provide tax, risk management, wealth management, and contract preparation services. BEST Exit Plan Advisor has been trained to manage your team of tax, legal, business, and financial planners to navigate your exit strategy. Click here for more details and a video on how to get started. If you want to see how prepared you are for transition, take the 15-minute Assessment at no charge: There is one indisputable fact – 100% of owners will eventually exit their business. The Assessment is a multiple-choice questionnaire that does not ask for confidential or financial information. Nevertheless, it is a critical first step in starting the discussion and planning process. Click here for more information concerning our free, no-obligation exit planning assessment.