The Most Important Investment You Can Make
By Paul R. Brown, M.A.
Principal, BROWNSTONE Capital Advisors LLC
Recently, I returned home from a fast trip to and from Denver. Carrying my gym bag filled with denim, leather and head-gear, I flew
there to pick up a recently purchased motorcycle and ride it back to my home in Washington. In this case, I got both the bike and
the adventure. Not a bad deal.
This wasn’t an impulsive reaction to turning … whatever my age is. Last fall I had a long talk with my “personal financial controller”
who agreed that a low-mileage-heavy-cruiser motorcycle would be a lot of fun. Since she enjoys riding, we both felt this could
bring a new dimension in our marriage and since our kids are grown we would have lots of time to explore the great northwest!
Besides, my accountant told me how to write this off as a business expense.
I started looking. And would be embarrassed to estimate the hours spent on the following dot-coms: soundrider, ebay and
cycletrader. Like a kid in a candy store, everything I saw was appealing.
Finally, I began asking some important questions:
• What type of rides would I be going on?
• How much am I willing – or unwilling – to spend?
• What am I hearing on the street about quality?
• How long do I expect to be riding?
• What are the “raving fans” saying?
Going through this abbreviated planning process, I set my eyes on just three possibilities before making an offer on my new-to-
me-low-mileage Honda Valkyrie. What had previously taken months of head-scratching was completed in less than two weeks.
After I had a clear picture of what I wanted.
Owners investing in planning can experience similar results. In fact, I’m such a believer in the “power of planning” that I include
elements of strategic planning in every engagement. Let me show you.
Planning and People.
Currently we are managing the executive search process for a large, government agency. While many “headhunters” start with the
actual position – in this case the executive director – and its requirements, we started by asking a series of questions about the
organization. In fact, we scheduled meetings with employees, employee groups, members of the board of directors, tenants,
community leaders, business representatives, professional agencies and organizations, politicians and industry experts. We did
so after assuming – correctly, I believe – that you cannot hire an “A” level executive (or employee) until you’ve first identified what
you are recruiting to; including the future challenges and opportunities of the organization as well as the inherent and operational
“gaps” that need to be filled.
As a result of our planning work, we are able to put together a pretty complete picture of the type of person needed to lead the
agency – including the skills, the career path, the accomplishments and the behaviors – at this time in its history. Why is this
important? Because (1) most businesses – including those who use executive search firms – only hire “A” players 25% of the
time; and (2) hiring the wrong person can be costly. Upwards of 15 times the employee’s annual salary.
Planning and Partners.
Many of you know we do quite a bit of work preventing partnership issues before they become partnership issues. In doing so, it is
not uncommon for us to work through a series of conflicting goals before bringing partners to the place where they can create an
actual continuation plan and partnership charter.
We once met with three partners of a successful construction company. The oldest one, north of the age of 60, had initiated the
steps to sell the business. He wanted to pursue other interests and – in the absence of a formal agreement – was forcing the
issue. His partners were caught off guard. They were at a different life-stage and needed the income from the business. At the
same time, they did not have the money to buy out the retiring partner.
At the time, they had talked about a buy-sell agreement only to discover the person pushing this also wanted them to buy a lot of
insurance. They called us and agreed – perhaps reluctantly – to go through a rudimentary planning process that would give each
one an opportunity to clarify their personal goals before establishing the role the company has in helping them meet them. (By the
way: I only convinced them to go this route after telling them that if they believed that I was wasting their time I would not expect
them to pay me for the planning portion of the project.)
Once we understood the personal goals and vision of the partners, the actual business continuation plan – while not exactly
“writing itself” – became increasingly clear. Again, the investment in planning brought about an agreement that each partner
embraced. And yes, they paid me for the full project.
Planning and Succession.
Succession planning for business owners is a combination of “art” and “science.” The science of succession can be found in a
textbook application of tax strategies, estate planning and financial forecasting. No succession plan would be complete – in my
opinion – without this.
However, our clients talk a great deal about the “art” we bring to their planning. Before moving into the tactical side of the process,
we make certain we understand the more compelling – and more difficult to nail down – issues of personal vision, family
concerns and legacy goals. In fact, our first step is to guide owners through a series of discussions whereby they can state their
succession goals in each of seven life domains: Personal, Family, Faith, Financial, Vocation, Community and Legacy. Don’t get
me wrong: this is not the “soft side” of planning. This is the part where we nail down the types of rewards the owner(s) want to
receive from the years invested in their business. Not surprisingly, in many instances this is the most rewarding part of the
Succession Blueprint process.
Once again, having first established a clear picture or vision of what he or she desires, we can bring the other pieces of the
succession puzzle together to help owners achieve their preferred future.
What is true for people, for partners, for owners is true for every business: careful planning can create a clear picture of a
promising future. And with that in place, the steps necessary to achieve this future can be confidently taken.
I’m a planner. Actually, now I’m a planner with a great motorcycle in my garage and a few more summer trips on the calendar.
The motorcycle that reminds me of the power of planning.
©Paul Brown 2005 to current
About the author:
Paul Brown is the founding partner of BROWNSTONE Capital Advisors and provides business advisory and succession planning services to
family businesses, middle market closely-held companies, and non-profit organizations. Formerly with Moss Adams LLP, the tenth largest
accounting and consulting firm in the United States, Paul has more than fifteen years experience in resolving difficult business and transition
challenges for clients in nearly every industry.
As a recognized authority on business succession and business continuation planning, he has spoken to local, regional and national conferences,
as well as private seminars. Paul works closely with accounting firms, attorneys and financial advisors to coordinate a comprehensive approach
to business succession planning for their middle-market clients.
Paul has clients throughout the United States and in Eastern Europe. He has a Master of Arts degree in organizational leadership.
Contact Information:
Paul R. Brown
BROWNSTONE Capital Advisors LLC
PO Box 151427
Spokane, WA 99214
PHONE: (509) 926-6922
TOLL FREE: (877) 265-1742
EMAIL: paul.brown@brownstonecap.com