“Fourth Quarter” First - NAIFA-Nebraska · Best Selling “7 Habits” Author Stephen Covey “Begin With The . End In Mind.” “Begin With The End In Mind” “Fourth Quarter”

How Today’s Family Business Pioneers Are Achieving

Incredible Lasting Results

“Fourth Quarter” First

Nick Niemann, JD, CEPA

Our Approach For Today

Bob’s Story Failed to understand all Business Models are perishable.

What Do You and I see Every Day . . .

Patty’s Story Failed to protect family wealth.

Carla’s Story Failed to control family ownership.

Randy’s Story Failed to develop key successors.

(Actual names and facts not used)

What Results Does Every

Business Owner

Results Wanted

WEALTH PROTECTION

LIFESTYLE CONTINUITY

PERSONAL FREEDOM

PROFITABLE GROWTH

Results Achieved By

Results Wanted

Today’s Agenda 4th Quarter Game Plan

Profitable Growth

Wealth Protection

Lifestyle Continuity

Personal Freedom

Wrap Up

Best Selling “7 Habits” Author Stephen Covey

“Begin With The End In Mind.”

“Begin With The

End In Mind”

“Fourth Quarter”

- For Business Owners -

“Fourth Quarter Effect”

- What is the -

● Owner ● Spouse ● Children ● Customers ● Successors ● Key Employees ● Banker ● Partners ● Community

Changing Dynamics In “Fourth Quarter”

● Business Model ● Opportunities ● Estate Planning ● Investments ● Financial Planning ● Health ● Disability or Death

Concerns ● LT Care Concerns ● Legacy

The Business Owner’s Reality

Time In Action

1st Qtr

2nd Qtr

3rd Qtr

4th Quarter 1st Mindset

Not 4th Quarter 1st Mindset

Company Growth

4th Qtr

Business Owner’s Time In Action

First Half Second Half 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2 Minute

Warning

Main Aspect Start Build

or Decline Grow

or Decline Exit

Common Owner Goals Be Successful / Make A Profit Stay Successful / Make A

Difference Common

Owner Mindset

“Bring It On!” “Well … Let’s Think About That”

Common Key Employee Mindset

“Let’s Get On This Ride!” “When Do I Get To Drive?”

- Succession & Exit Planning -

Fourth Quarter First Mindset

Reality Today In this age of massive disruption – To be and stay successful today, CEOs and their successors need to be Pioneers

Who Are Today’s Family

Business Pioneers?

The Deloitte Business Chemistry Project

Trend Example:

Leadership Styles:

51% of CEOs Principally Pioneers • Pioneer

• Guardian • Driver • Integrator

How Do Today’s Family

Business Pioneers Think and Act?

From Our Discussions With 1200+ CEO’s:

75 + Mindset Ways They Think & Act

Example:

Pioneer Mindset “Fourth Quarter” First. Begin all thinking with the end in mind.

Example:

Pioneer Mindset Plans. Recognize that all plans should be firm … until changed.

Your Fourth Quarter Outcome

Getting Started

What will be the probable, almost certain, future outcome of your present course if left

unchanged

Key Question #1

What’s missing, the presence of which will

make a substantial difference in producing

a better future outcome

Key Question #2

Address The Possibilities

“Why Bother … I Don’t Plan To Retire Soon”

12 Reasons Behind Incredible Fourth Quarter Results

4 Well Designed Company Structure and Key Asset Protection

3 Co-Owner Issues and Disputes Addressed Up Front

1 Sustainable Business Growth

2 Capable Leadership Successors

6 Cash Flow Impact On Company Price Is Understood

5 Clear and Consistent Owner Objectives

10 Pre-Exit Tax Tools

9 Keeping the Business Always Ready for Sale

7 Management of Personal Wealth

8 Business Owner Estate Plan

12 Understanding the M & A Market

11 Capable Inside Buyer Exists

Who Is Impacted?

● The Front Line

The Lender and Bonding Company

The Profit Strategy Team

The Business Owners

● The Family

The Key Executive

● The CEO/President

● The Board of Directors

● The Investor

● The Business Buyer and the Business Seller

● Associations

The Human Resources Director

The Strategic Planning Advisor

● The “Capital Call” Funder

● The Financial Advisor

The Estate Planning Attorney

● The Corporate Attorney

● The Outside CPA

● The Startup Company

The ESOP Trustee

● The Business Coach

● The Company Appraiser

The Franchisor and the Franchisee

The Chamber of Commerce and DED

● The Executive Peer Group Organization

The Succession and Exit Planning Advisor

Overcoming The Big Fourth Quarter Roadblocks

● Family Disputes

● Asset Loss

● Business Model Decline

● The Missing Buyer

● Objectives Chaos

● Leadership Void

● Price Mis-Expectation

● Tax Hit

● Hanging On Too Long

● Co-Owner Disputes

● Third Party Consents

● Financial Dependence

● Unexpected Adversity

● Non-Credible Accounting

● Insufficient Cash Flow

● Financing Gap

Take To Heart The Prime Fourth Quarter Objectives

5. Why

6. How Much

4. When

3. Where

2. What

1. Who

What’s In Your “Green Box”? The Story of John and Jim McArthur

You can see 28 million small businesses in the U.S. – Small Business Administration (SBA)

WHAT YOU CAN’T SEE INCLUDES:

Know what’s below, Call before you “dig”

Your Business Strategy

Stops Working

Your Retirement

$$ Doesn’t Last

Your “Successor” Not Ready

When You Are

Your “Unexpected

Happens” $$

Isn’t Enough

Partner & Family Disputes Drain $$ and

Passion

Litigation Losses

Drain $$ and Endurance

Cash Is

PROFITABLE GROWTH

WEALTH PROTECTION

PERSONAL FREEDOM

The Right Cash At … Exactly The Right Time … In The Right Place

The Incredible Role of Life Insurance In

“Fourth Quarter” Planning

$$ Needs A Plan To Fit Into

What Is $$ Needed For

The Right Cash – Personal ● Retirement $ _______

● Spouse Lifestyle Continuity $ _______

● Children Goals $ _______

● Grandchildren Goals $ _______

● Bloodline Opportunities $ _______

● Vacation Home Retention $ _______

● Estate & Income Taxes $ _______

● Debt Pay Off $ _______

● Charities $ _______

● Estate Equalization $ _______

Total $ _______

Existing Cash/Liquidity $(_______)

Existing Life Insurance $(_______)

Short / Long $ _______

Business ● Buy-Sell Agreement $ _______

● Deferred Compensation $ _______

● Credit & Bonding Support $ _______

● Business Expansion $ _______

● Key Personnel Loss $ _______

● Business Continuity $ _______

● Key Person Stay Bonus $ _______

● Other: ______________ $ _______

Total $ _______

What’s Needed

Life Insurance Portfolio

Business

Personal

Business Operating

Revocable Living Trust

Irrevocable Life

Insurance Trust

Bloodline Planning

Vacation Home Trust

Real Estate

Holding Co.

$$ Fits Into The Plan

Results Wanted WEALTH

PROTECTION

PERSONAL FREEDOM

PROFITABLE GROWTH

Quarter Inch Hole

Playbook Terminology

End Results Wanted

Main Play Quarter Inch Drill Bit

Example:

Pioneer Mindset Great Enough. Don’t let a fruitless quest for perfection delay getting the great done now.

Profitable Growth

Wealth Protection

Personal Freedom

Wrap Up

Goodnight Irene: Not the Result She Had Expected

Your Profit Playbook Profitable Growth For Your Business

PROFITABLE GROWTH

- Import / Export Business – Business Model Failing -

1. The Pioneer Mindset Initiative

2. Profit Strategy Team 3. Business Model

Command Initiative 4. Company Core Values

Initiative 5. Business Model Tool

Room Initiative 6. Business Growth

Incentives Initiative

Your Profit Playbook - Main Plays -

More Than

(Cisco CEO John Chambers June 7, 2015)

of businesses today will not survive the next 10 years 33%

Some Realities Today

(Cisco CEO John Chambers speaking to 25,000 business attendees at June 7, 2015 conference)

“Either we disrupt or we get disrupted.”

Outrageous Successes

Stunning Falls

Outrageous Successes

Restaurant Sector

Business Model Turbulence Today

A Real Need To: • Know Your Business

Model • Have A Very Effective

Strategic Planning Process

Applies To All Companies

Small Middle Market

• Business • Professional

Applies To All Sectors

netflixed

No One Is Immune

netflixed

netflixing

No One Is Immune

netflixing

No One Is Immune

netflixing and

netflixed

No One Is Immune

netflixing

No One Is Immune

netflixing

No One Is Immune

What Separates Them?

Common “Reasons” For Success or Failure

• Products • Services • Customer Demand • The Economy • Finance Mgmnt • Operations Mgmnt • Pricing • Cash Flow • Leadership • Successor • Employee Turnover

But What Are The Root Causes

• Personnel • Competition • Insurgents • Attitudes • Customer Relationships • Technology • Financing • Taxes • Costs Control • Customer Turnover • Channels

• Government • Behaviors • Personnel Disputes • Family Issues • Company Salability • Owner Disputes • Accidents • Litigation • Suppliers • Fraud

• Etc…

The Success/Failure Reasons …

Products/Services Customer Demand The Economy Pricing Technology Channels

Family Issues Company Salability Owner Disputes Etc…

Personnel Disputes Accidents Litigation Fraud Etc…

Finance Mgmnt Operations Mgmnt Leadership Successor

Employee Turnover Attitudes Costs Control Customer Turnover Behaviors

Business Model

Leadership

Culture

Financing Taxes Government Suppliers Resources Etc…

Cash Flow Personnel Competition Insurgents Customer Relationships

The Root Causes

PROFITABLE GROWTH

Profit Playbook

End Result Wanted “In this battle of now constant, massive disruption and new horizons, our Company is built to explore new possibilities, to endure and adapt, and to profitably grow.”

Threat To Continued Success No Solutions to Massive Disruptions

Main Play The Pioneer Mindset Initiative

“Our Leadership Team never answers a question by saying: ‘Because that’s how we’ve always done it.’”

The Profit Strategy Team

Profit Playbook

End Result Wanted

Threat To Continued Success Innovation Roadblocks

Main Play

PROFITABLE GROWTH

“We are keeping the leaders of other companies awake at night.”

The Business Model Command Initiative

Profit Playbook

End Result Wanted

Threat To Continued Success Business Model Misfire, Decline or Failure

Main Play

PROFITABLE GROWTH

“Loyalty to our Company is so strong that our Customers and our Team don’t even think of switching.”

The Company Core Values Initiative

Profit Playbook

End Result Wanted

Threat To Continued Success

Main Play Company Culture Clashes

PROFITABLE GROWTH

“Our Leadership Team is never satisfied with just doing a great job of managing what we’ve got. They are constantly eliminating old opportunities we shouldn’t be doing anymore and creating new opportunities we should start doing.”

The Business Model Tool Room Initiative

Profit Playbook

End Result Wanted

Main Play Competitors/Insurgents/Economy/Technology/Government Beat You

PROFITABLE GROWTH

“We are finding and capturing each opportunity where the government actually is there to help us.”

The Business Growth Incentives Initiative

Profit Playbook

End Result Wanted

Threat To Continued Success Profitable Government Initiatives Ignored

Main Play

PROFITABLE GROWTH

Total $ _______

● Debt Pay Off $ 1,000,000

● Credit & Bonding Support $ 1,000,000

● Business Expansion $ 1,000,000

● Other: ______________ $ _______

Total $ _______

What’s Needed

Business

Personal

Business Operating

Irrevocable Life

Insurance Trust

Bloodline Planning

Vacation Home Trust

Real Estate

Holding Co.

Example:

Pioneer Mindset Focus. Only begin everything that should be started now (taking the simplest route possible).

Profitable Growth

Wealth Protection

Personal Freedom

Wrap Up

Eric’s Game Plan: Ticking Time Bombs

Your Protection Playbook Protection For What You’re Building

Wealth Protection

WEALTH PROTECTION

Buy-Sell Agreement. Partner Death. Optimistic Price. Outdated. No Life Insurance.

1. Business Wealth Protection System

2. Buy-Sell Agreement 3. Business Continuity

Agreement 4. Leadership Team

Protection Program 5. CEO Disaster Protocol 6. Personal Wealth

Protection System

Your Protection Playbook - Main Plays -

WEALTH PROTECTION

Protection Playbook

“No one can take what our Company has built.”

The Business Wealth Protection System

End Result Wanted

Main Play Business Litigation Losses

WEALTH PROTECTION

Protection Playbook

“We will have only the right Owners at all times.”

The Buy-Sell Agreement

End Result Wanted

Main Play Ownership Not Tightly Controlled

WEALTH PROTECTION

Protection Playbook

“Our Owners will always get along. Period.”

The Business Continuity Agreement

End Result Wanted

Main Play Avoidable Owner Disputes Crush You

WEALTH PROTECTION

Protection Playbook

“Our Leadership Team sees our Company as the best place to achieve their personal and career aspirations.”

The Leadership Team Protection Program

End Result Wanted

Main Play Leadership Team Members Leave

WEALTH PROTECTION

Protection Playbook

“If I go down unexpectedly, our Company won’t.”

The CEO Disaster Protocol

End Result Wanted

Main Play CEO Lost Unexpectedly

WEALTH PROTECTION

Protection Playbook

“No one can take what our Family has built.”

The Personal Wealth Protection System

End Result Wanted

Main Play Personal Risks Deplete Your Resources

Total $ _______

Business ● Buy-Sell Agreement $ 2,000,000

● Credit & Bonding Support $ ________

● Business Expansion $ ________

● Key Personnel Loss $ 1,000,000

● Business Continuity $ 1,000,000

● Key Person Stay Bonus $ 500,000

● Other: ______________ $ _______

Total $ _______

What’s Needed

Business

Personal

Business Operating

Irrevocable Life

Insurance Trust

Bloodline Planning

Vacation Home Trust

Real Estate

Holding Co.

Example:

Pioneer Mindset Simplify. Dramatically reduce unnecessary complexity.

Profitable Growth

Wealth Protection

Personal Freedom

Wrap Up

Charlie’s Game Plan Legacy: “Let My Spouse Deal With It”

Your Estate Playbook Lifestyle Continuity For You and Your Family

- Charlie’s death. Co-created Silver Bay Personal Brewery. Partner issues. No Business Owner Estate Plan -

1. Family Estate Plan 2. Family Bloodline Planning

Trust 3. Family Ownership

Allocation Plan 4. Family Peacekeeper

Policy 5. Family Ownership

Retention Agreement 6. Family Estate Tax Plan

Your Estate Playbook - Main Plays -

“I love my Family. Let’s be clear. I am protecting them.”

The Family Estate Plan

Estate Playbook

End Result Wanted

Main Play Insufficient Family Wealth Controls

“I don’t want to just protect my Family. I have created long term business and personal opportunities for them.”

The Family Bloodline Planning Trust

Estate Playbook

End Result Wanted

Main Play Bloodline Wealth Opportunities Wasted

“We’ll be fair to all children, which includes the freedom to own, control and operate the Company for those with the passion to do so.”

The Family Ownership Allocation Plan

Estate Playbook

End Result Wanted

Main Play

Family Members Who Shouldn’t Or Don’t Want To Become Owners

“If my Family wants to be involved with our Company, I won’t allow our great Company to come between them.”

The Family Peacekeeper Policy

Estate Playbook

End Result Wanted

Main Play Business Disputes With Family

“With Family ownership comes responsibility to act in the best interests of all. So, we have pre-set the rules for who gets to remain Owners.”

The Family Ownership Retention Agreement

Estate Playbook

End Result Wanted

Main Play

Family Members Who Shouldn’t Or Don’t Want To Remain Owners

“We haven’t built all of this for Uncle Sam to take away or to deplete.”

The Family Estate Tax Plan

Estate Playbook

End Result Wanted

Main Play Estate Tax Hit

● Spouse Lifestyle Continuity $ 2,000,000

● Children Goals $ 500,000

● Grandchildren Goals $ 400,000

● Bloodline Opportunities $ 500,000

● Vacation Home Retention $ 300,000

● Estate & Income Taxes $ 500,000

● Debt Pay Off $ 500,000

● Charities $ 200,000

● Estate Equalization $ 2,000,000

Total $ _______

● Other: ______________ $ _______

Total $ _______

What’s Needed

Business

Personal

Business Operating

Irrevocable Life

Insurance Trust

Bloodline Planning

Vacation Home Trust

Real Estate

Holding Co.

Example:

Pioneer Mindset Course Correction. Be quick to fully recognize when the situation has changed.

Profitable Growth

Wealth Protection

Personal Freedom

Wrap Up

Art’s Dilemma: Leaders With Conflicting Objectives

Your Succession Playbook Personal Freedom On Your Terms

PERSONAL FREEDOM

Retail Business. Key Employee Pete wanted deal. Business Model challenges.

1. Business Value Scorecard

2. Leadership Development Program

3. Pre-Sale Checkup 4. Tax Reduction Strategy 5. Inside Route Exit Plan 6. Outside Route Exit Plan

Your Succession Playbook - Main Plays -

“I know the score and whether I am ahead or behind.”

The Business Value Scorecard

PERSONAL FREEDOM

Succession Playbook

End Result Wanted

Main Play Insufficient Cash In Pocket

“Our leadership depth chart is as solid as the best professional sports team.”

The Leadership Development Program

PERSONAL FREEDOM

Succession Playbook

End Result Wanted

Main Play Successor Not Ready

“We are profiting today by always being in prime purchase condition.”

The Pre-Sale Checkup

PERSONAL FREEDOM

Succession Playbook

End Result Wanted

Main Play Company Not In Prime Condition

“We are living up to our patriotic duty to help control the size of government by paying the least taxes legally allowable.”

The Tax Reduction Strategy

PERSONAL FREEDOM

Succession Playbook

End Result Wanted

Main Play Income Tax Hit

“We built our Company together. My Team is ready and able to take it forward.”

The Inside Route Exit Plan

PERSONAL FREEDOM

Succession Playbook

End Result Wanted

Main Play No Effective Inside Route Exit

“If the best interests of my Family and our Team are served by bringing in an outside owner for our Company, we know we’ll be successful doing this.”

The Outside Route Exit Plan

PERSONAL FREEDOM

Succession Playbook

End Result Wanted

Main Play No Effective Outside Route Exit

The Right Cash – Personal ● Retirement $ 2,000,000

Total $ _______

● Deferred Compensation $ 1,000,000

● Other: ______________ $ _______

Total $ _______

What’s Needed

Business

Personal

Business Operating

Irrevocable Life

Insurance Trust

Bloodline Planning

Vacation Home Trust

Real Estate

Holding Co.

The Right Cash – Personal ● Retirement $ 2,000,000

● Spouse Lifestyle Continuity $ 2,000,000

● Children Goals $ 500,000

● Grandchildren Goals $ 400,000

● Bloodline Opportunities $ 500,000

● Vacation Home Retention $ 300,000

● Estate & Income Taxes $ 500,000

● Debt Pay Off $ 500,000

● Charities $ 200,000

● Estate Equalization $ 2,000,000

Total $ 8,900,000

Existing Cash/Liquidity $(1,000,000)

Existing Life Insurance $(1,000,000)

Short $ 6,900,000

Business ● Buy-Sell Agreement $ 2,000,000

● Deferred Compensation $ 1,000,000

● Debt Pay Off $ 1,000,000

● Credit & Bonding Support $ 1,000,000

● Business Expansion $ 1,000,000

● Key Personnel Loss $ 1,000,000

● Business Continuity $ 1,000,000

● Key Person Stay Bonus $ 500,000

● Other: ______________ $ _______

Total $ 8,500,000

Existing Cash/Liquidity $(1,000,000)

Existing Life Insurance $(1,000,000)

Short $ 6,500,000

What’s Needed

Business

Personal

Business Operating

Irrevocable Life

Insurance Trust

Bloodline Planning

Vacation Home Trust

Real Estate

Holding Co.

Example:

Pioneer Mindset Unlearn. Face the need to unlearn much of what you learned that just isn’t so (or is no longer so).

Profitable Growth

Wealth Protection

Personal Freedom

Wrap Up

Results Achieved By

Results Wanted

Creating A Fourth Quarter Game Plan For

John and Susan Smith

Priorities

2017 John and Susan Smith Fourth Quarter Game Plan

Business Value Scorecard Leadership Development Program Pre-Sale Checkup Tax Reduction Strategy Inside Route Exit Plan Outside Route Exit Plan

Succession Playbook

Profit Playbook Protection Playbook

Estate Playbook Family Estate Plan Family Bloodline Planning Trust Family Ownership Allocation Plan Family Peacekeeper Policy Family Ownership Retention Agreement Family Estate Tax Plan

Business Wealth Protection System Buy-Sell Agreement Business Continuity Agreement Leadership Team Protection Program CEO Disaster Protocol Personal Wealth Protection System

The Pioneer Mindset Initiative Profit Strategy Team Business Model Command Initiative Company Core Values Initiative Business Model Tool Room Initiative Business Growth Incentives Initiative

Succession Playbook

Companies We’ve Used This For

Small Middle Market

● Consumer Product Manufacturing

● Industrial Manufacturing ● Business Services ● Food and Beverage ● Construction ● Health Care ● Agribusiness ● Farm & Ranch ● Real Estate ● Product Development ● Energy

Business Professional ● Distribution ● Financial Services ● Retail ● Human Resources ● Franchise ● Security ● Consumer Services ● Education ● Personal Services ● Leasing ● Technology Licensing ● Transportation

● CPAs ● Financial Planners ● Insurance Advisors ● Business Consultants ● Investment Advisors ● Environmental Specialists ● Engineers ● Attorneys ● Architects ● Physicians ● IT Professionals ● Real Estate Developers

Sectors We’ve Used This For

Why Is The Fourth Quarter Game Plan

Program So Successful?

Because we follow the same Pioneer Mindset approach we’ve learned from

Family Business Pioneers

TAKEAWAY Begin

With The End In Mind

Fourth Quarter

Example:

Pioneer Mindset Sanity Check. Make sure you have a capable someone to sanity-check your “great” ideas.

Collaboration by Advisor Team

Example:

Pioneer Mindset Step Back. Always step back away from the detail to make sure you are catching the big picture, the big issues and the big opportunities.

Is Your Client’s Plan Like The Frog In The

Kettle Story?

- Be Optimistic …

But Beware Of:

“Optimism Bias”

Example:

Pioneer Mindset Bench Strength. Only God knows when your time is up. Have your successor ready now.

Example:

Pioneer Mindset Your Choice. The future you want won’t happen on its own. Cause what you want or accept what others create for you.

If You Would Like To Be

Added To Our Mailing List

Please Leave Me (or Joe or Stacie)

Your Business Card

Thank You!

www.FourthQuarterFirst.com www.McGrathNorth.com

NNiemann@McGrathNorth.com 402-633-1489

Nick Niemann, JD, CEPA Business Continuity & Succession Planning Attorney

McGrath North Law Firm Omaha, Nebraska

To Book Nick To Speak At Your Next ● Business, Industry or Professional Conference ● Company Strategic Planning Session

Email: NNiemann@McGrathNorth.com or Call: 402-633-1489

Presentation Notice

This presentation should not be considered as legal, business or financial advice. This presentation is designed to provide information about the subject matter covered. It is provided with the understanding that while the speaker/author is a practicing business owner advisor, neither he nor his firm has been engaged by the attendee/reader to render legal or other professional services (unless a specific engagement agreement has been executed). If legal, business or financial advice or other expert assistance is required by the attendee/reader, the services of a competent professional should be sought.

“Fourth Quarter” First How Today’s Family Business

Pioneers Are Achieving Incredible Lasting Results

“Fourth Quarter” First - NAIFA-Nebraska · Best Selling “7 Habits” Author Stephen Covey “Begin With The . End In Mind.” “Begin With The End In Mind” “Fourth Quarter”

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