Are You Building a Legacy?

Every day you work with clients who are concerned about building a legacy. A legacy is what you pass on to the next generation. What will you be able to pass on as a result of your business? Do you even want to build a legacy business, or are you only concerned about building a lifestyle business? That is a very important question that impacts your daily decisions.

A lifestyle business is a business that supports the lifestyle you want. So if you’re only concerned with building a lifestyle business your main concern is generating enough revenue to meet your financial needs. No small undertaking in and of itself. Quite often those entering the business have grand visions about the lifestyle they will be able to live once they’ve made it. Usually when you’re making those mental projections you’re looking at the top 3% of those in the industry, and discounting the actual earnings of the average producer. There isn’t anything wrong with that. It just means that you have to take the required actions to be a top producer yourself rather than an average producer.

When you plan a lifestyle business you aren’t planning for a transferable or salable business. Now some of you are captive and have preset conditions for exiting the business. Just like any business owner when you get ready to leave the business you have choices. You could work until retirement and simply close the doors. In which case, an ongoing income from the business will not be part of your plan to fulfill your financial needs for retirement. You could actively work the business until a certain point in time when, having prepared others to take on your daily responsibilities, you can take on a purely leadership role and continue to draw a direct income from the business for running the business. Whatever you plan you just need to take the appropriate actions long before you get to that time so you have everything in place to provide what you intend.

If you intend to build a legacy, what will that mean for you? Does it mean providing a financial gift to the people and causes that are important to you? Does it mean building a business that is transferable or salable? If you want to transfer your business have you developed the people who will fill your shoes someday to take on the roles you’ll be giving up? When it comes to selling a business did you know that all businesses are marketable but most aren’t salable? The majority of the businesses that are put on the market today will never sell, or they will sell for far less than the owner envisioned? This can be especially true for service businesses because your biggest asset is your client base. Your client base won’t provide enough salable value if the business depends on you to succeed. Because once you aren’t active in the business your clients will start defecting leaving any potential buyer with very little value.

Lifestyle or legacy, there isn’t one right choice. There is only the choice that is right for you. As we enter the last quarter of the year now is the time you and other business owners begin to think about their strategic plans for the upcoming year. Thinking about the kind of business you want to build, how will that choice impact your resource allocations or resource needs? How will it impact your people? And are you taking the actions you need to take now to develop the people who will provide for the lifestyle and/or legacy you envision?