Just out., August 19, 2005, Page 14, Image 14

14 just out » august
19 2005
Jl.MWUlWnews
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Small-business owners should plan for the future
by Rebecca Ragain
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“A transfer to employees is pretty common
he day-to-day life of a small­
business owner leaves little time for both straight and gay folks,” says Green.
for long-term planning. No matter
When an internal candidate—whether an
what kind of business it is—retail employee or a child—has potential, Clift rec­
store, private practice or manufac­ ommends the owner bring the candidate in
turer—the owner has fires to put out, long
with hours
a minority interest, perhaps 20 percent.
to work and myriad details to manage. The successor should be involved in the man­
But as hard as it is to look to the future when agement decisions while they hold minority
present matters demand constant attention, it’s interest.
important for business owners to determine an
“Get them in ownership now. Help them
exit strategy.
start thinking like an owner, not an employee,”
“Exit strategy should be in your business plan he says.
from Day One, because it’s a reality,” says Mark
As the successor proves him or herself in a
Green, director of Oregon State University’s management role, the owner allows the succes­
Austin Family Business Program.
sor to gradually buy out the remainder of the
There are a variety of ways to handle an stock. Clift suggests three years as a reasonable
owner’s departure from a business, including length of time for the transition.
selling the business, folding it or gifting it to a
A partnership arrangement of this type is
the best bet for most of Portland’s
sexual minority business owners,
says Clift, because in his experience
they don’t usually employ more than
six or seven people; exit strategy
may he different for owners of larger
companies.
Kimbyl Edwards is a lesbian small­
business owner who is passing on her
company through just such a partner­
ship, albeit with a slight twist: She
found her successor online.
A couple of years ago Edwards was
contemplating the options for her
business, Zen Again Productions,
which specializes in fountains and
statuary. She had no internal candi­
Zen Again's Kimbyl Edwards found her business partner
date in mind, so she advertised on
on CraigsList.org.
CraigsList.com for a potential succes­
charity. Each option has pros and cons in terms sor to train.
of income, taxes and other considerations; a
Kina Williams was new to Portland and
financial adviser can help business owners nav­ looking for a reliable job when she read
igate the murky waters.
Edwards’ post. Williams had always wanted to
run her own business, and she liked the wording
C hoosing a S uccessor
of the ad—woman-owned was a key word for
Many small-business owners dream of pass­ Williams, who is a lesbian.
ing the company on to their children. But that’s
Williams gave Edwards a call, and three days
not a concern for everyone in the sexual later she was hired.
minorities community, or even an option.
Now Edwards is passing the torch to
Instead of planning for succession, Bill Dick­ Williams, hit by bit. Even though Williams pre­
ey, co-owner of Witham & Dickey printing viously managed a business, she still has a lot to
company, has simply included his stock in the absorb about the particulars of Zen Again, from
company in his estate plan.
the product line to the importing process.
“My business partner is a straight man with a
The two have no hard-and-fast timelines in
wife and kids. His goals are different than mine. place, but Williams imagines she’ll be running
I’m not too worried about my estate; I have to the business within five years.
take care of me,” he says.
Since Williams doesn’t have the resources to
Even when children are part of the picture, buy Edwards out, they will be coming up with
family succession is a hit-and-miss proposition. creative ways to transfer ownership. Williams
About 70 percent of family businesses fail in the may receive a percentage of stock in the busi­
second generation. So as far as Green is con­ ness as a Christmas bonus, for instance.
cerned, there are no differences between
Williams hopes this succession process will
straight people and members of the sexual serve as a model for other gay and lesbian busi­
minorities community in terms of business suc­ ness owners. She expects her own retirement to
cession issues.
he smoother for the experience.
“Succession is a problem for any business.
“I’m a dyke and have no interest in having
We’re not going to be here forever.... Passing children. What will I do with it [Zen Again}
on their business takes a lot of work and effort, when I retire? It’s hopeful for me to develop a
no matter what the circumstances,” says Green. model.. .to perpetuate this for generations,” says
Mark Clift, a certified public accountant Williams, who would like to find another les­
with McDonald Jacobs (and Just Out’s accoun­ bian to he her successor in due course.
tant), says an internal buyout is often the “first
line of attack” in succession planning. In a mul­ S elling to O utside P arties
tiple owner arrangement, the buyout can come
If there is no suitable successor, the business
from the other shareholders. In a single propri­ owner may decide to sell to an outsider. In this
etorship, the departing owner can groom a suc­ case, business owners should expect to spend
cessor, such as a key employee, to take control between two and five years before they intend
of the company.
to sell “prettying up the pig,” nr putting the
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