Don McCrea is the head of Your Business Legacy, and a family business retirement exit planning coach. For over 25 years, he helped individuals and their businesses achieve phenomenal, enduring success. He worked with businesses of all sizes in a variety of capacities—business strategist; management, marketing and sales consultant; sales, marketing, and systems development manager; intrapreneur (in-house entrepreneur); and systems designer; custom education solutions consultant; and educator.
Don holds a Ph.D. in Executive Management from the Peter F. Drucker Graduate School of Management at Claremont Graduate University and an M.S. in Mathematics from the University of Michigan.
Connect with Don on LinkedIn and follow YBL on Facebook.
What You’ll Learn In This Episode
- Successfully Retiring as a Family Business Owner
- The biggest issues family business owners face when preparing to retire
- The critical pieces to plan for to successfully pass on the business
This transcript is machine transcribed by Sonix
Intro: [00:00:02] Broadcasting live from the Business RadioX Studios in Atlanta, Georgia. It’s time for Coach the Coach radio brought to you by the Business RadioX Ambassador Program, the no-cost business development strategy for coaches who want to spend more time serving local business clients and less time selling them. Go to brxambassador.com To learn more. Now here’s your host.
Lee Kantor: [00:00:33] Lee Kantor here, another episode of Coach the Coach Radio, and this is going to be a fun one today on the show, we have Don McCrea and he is with your business legacy. Welcome, Don.
Don McCrea: [00:00:42] Great. Thank you, Lee. It’s a pleasure to be here.
Lee Kantor: [00:00:44] Well, I’m excited to learn what you’re up to. Tell us a little bit about your business legacy. How are you serving, folks?
Don McCrea: [00:00:49] The primary audience that I serve are those who are ready to either retire from their business or if they want to spend a little less time with their business. And I focus on family businesses, that’s a special place in my heart. But it doesn’t have to be considered to be a family business because the needs are all the same and the bigger. The big issues, of course, are the lack of planning and even recognizing the need to perhaps do some considerable planning before they retire from their business. So it’s about helping them retire successfully and helping them transition that business successfully to the next leader.
Lee Kantor: [00:01:28] Now how do you open up the conversation with a business owner? Because I would think that this is something they’re so heads down and they’re so usually driven and ambitious that stopping isn’t kind of in their radar. Does something typically happen? Is there something like a health scare or does some some event happen that kind of opens up their mind of, Hey, I better have a plan here. I can’t just let this kind of jump out at me.
Don McCrea: [00:01:54] Well, it can. It can happen in a variety of ways, and certainly some of it is, you know, I just like to spend less time with my business. This is really much more of a referral business. My best referral sources are estate planners, financial planners, sometimes CPAs, because they’re all having these endpoint conversations with the business owner. And, you know, just part of financial planning and estate planning, especially is really looking at when do you expect this event to occur and what part of that. So a lot of it is those those referral sources, some of it, though, is is business owners who just want a change in their business and they’re not sure where to go, what to do next, how to even get started in it. There’s a huge lack of of even recognition that planning ahead is necessary. It’s almost as though they they they it’s kind of at the back of their mind. Well, I can either sell the business or close the doors and and not understanding that even selling the business may require a lot of planning if they’ve been making all the decisions for 30 years and and they’ve not groomed, excuse me, succession in that if they’ve not groomed their successors for that, then the business doesn’t have much value because someone else can’t just step in and take the lead.
Lee Kantor: [00:03:16] Now, when you’re having these conversations with folks, they might, I guess, intellectually understand that, but they hadn’t maybe tactically done anything to, you know, kind of ensure that the transition happens seamlessly. I would imagine that that opens up a can of worms for them. It’s like, OK, now what do I do? And I can’t retire today. That means I have to wait a period of time. I would imagine it’s a couple of years, at least, to transition into having a sellable business because that might not be a sellable business, might be a different business than the one that they have because they might have to put things in place to make it more attractive in order to bring out the most value.
Don McCrea: [00:03:55] That’s exactly right. And and, you know, selling the business is just one of a number of options, particularly if it’s a family business. There may be a family member, a son, a daughter or a niece nephew who’s interested in really running the business. On the other hand, I’m I’m seeing more now of this younger generation that they want to go do their own thing. And so the the business founder is is kind of left hanging as well. I want to preserve this legacy that I’ve created over decades. How do I do that? Who do I transition it to? And some of the options are things like worker cooperatives, for example, or bringing in a business partner and allowing that partner to really take on more much more of the day to day operational aspects of the business. So there are just a variety of things that that can be considered. So the first is stage usually is I want something different, but I’m not sure what to do next. And that’s usually where I I get involved and it’s it’s an educational process. That’s part of the reason that I’m out there speaking to groups doing networking, et cetera, is to just make them aware of of the need to talk to someone who understands the process.
Lee Kantor: [00:05:17] And it’s one of those things I would imagine you find that in the head of the business owner, they think that the business is worth X. And then, you know, when you get someone to do a valuation, it might be X minus and they might. Really want to accept that or or they it kind of makes them aware that they might have to put things in place to make it get the valuation that they would like it to get. Do you help them through that?
Don McCrea: [00:05:44] I I can. I do. That’s that’s certainly one of the options. Once they’ve looked at other options like a worker cooperative, for example, then well, let’s
Lee Kantor: [00:05:57] Let’s pause right there. Worker worker cooperative is a new term to me, and it’s probably to a lot of our listeners. Can you explain what that means and how it works?
Don McCrea: [00:06:07] Sure. Most people are familiar with ESOPs employee stock ownership program. Sure. And there’s a there’s there are a lot of regulations associated with it, and I’m not an attorney. I call in business attorneys, estate planners, financial planners, et cetera. When that’s really what the client calls for and make sure that everyone’s talking to everyone else. Examples are complicated and they have rules and regulations associated with them and the filings you have to do and so on. Worker cooperatives are a much simpler process, and it’s when some or all of the all of the employees have a share in the business and there there are processes to put that together. I have a couple of consultants I work with who are specialists in really working through all of the issues of that, but it’s much simpler. It doesn’t have the rules and regulations. It really depends much more upon the the devotion of the employees, their interest in owning a piece of a business of their own, their willingness to to put in the time and the effort to do that. And then is the leadership and and business management expertize. They’re either individually or collectively. And if not, there are things that can be done to really build that expertize as well. So it’s each situation is totally different than the other, but it is really focused on the business and the employees being able to run that business successfully as opposed to meeting all these rules and regulations and so on that Aesop’s require.
Lee Kantor: [00:07:42] So now when you’re talking to a business leader about their options and they’re weighing, you know, what is the best fit for them? What are some of the questions that they typically ask you in order to kind of hone in on, you know, on what is the best option and what are some of the trade offs of the different options?
Don McCrea: [00:08:03] Well, it’s it’s much more of a conversation than than a question and response sort of thing because they don’t know what questions to ask very often. Very often it’s it’s what do I do next? Where do I start? What’s involved? And that initial exploratory conversation, it’s a complimentary conversation that really gets into understanding what what are they looking to do next with their life? What are their goals? Do they just want to spend less time with their business for a couple of years and maybe do a little more traveling? Or do they really want to fully separate from the business? And those are very different decisions because fully separating is almost a grieving process. This is your baby you’ve built for 30 plus years. All of a sudden you’re going to step away from that baby. And so a piece of that discussion is is really helping them understand what do they really want to do with their lives? And are they prepared to do that? I mean, I’ve, you know, I could tell you a number of stories of business owners, for example, that had had done no financial planning whatsoever.
Don McCrea: [00:09:17] They want to sell their business. One instance, for example, had two offers and you want to know what’s the right price for the business. And as we got into the conversation, it turned out that that he and his wife and their late 50s or early 60s did not have a financial plan. They had no idea how they were going to carry on the quality of life that they’d had for the next 20 years. So they I put them in touch with a financial planner that really helped them begin to look at what role that business and its its income or its financial return, if it were sold, would play in that and that long term financial plan that they really needed to put together. And they ultimately decided neither of those options were right. They needed a few more years to really build that financial plan and be assured of a quality of life that they really wanted and to do the traveling and so on for the next next 20 years of their lives.
Lee Kantor: [00:10:14] Now is that unusual to have a business leader at that stage of their career to just, you know, just think, Oh, I’ll just sell my business and that’s my retirement plan and then just hope it all works out?
Don McCrea: [00:10:28] Well, a piece of it is what you brought up much earlier that they’re so busy that. They haven’t they haven’t really given it much thought. You know, their focus for so many years has been on the business, on the business itself and and ensuring the business is successful. So they haven’t really given a lot of thought to that planning. A number of them do. They do have financial planners. They they really have been focused on building wealth for themselves and their family. But for example, there’s there’s one client that I’m beginning to get engaged with right now that the the business itself is a food truck, but it is a they’ve had that business for 30 years, includes catering business, very successful, located in the middle of downtown San Francisco. These are two young people that came as as kids off the streets in Mexico some number of years ago that now have a very successful business. They own a home of their own, and they own two ranches in the Central Valley, one of which supplies the the meat for the for the catering and and Typekit truck business. And they have no estate plan. Their business, the business is a sole proprietorship. There’s no legal structure there that that protects the business. And there’s there there’s no planning to protect the the considerable assets that they’ve built. And that was early on in the discussion, and the first thing I did was put them in touch and bring a financial planner in and turns out they need someone who’s who speaks Spanish as well. And so we’ve we’ve got the second financial planner involved who’s now working with them to get just the powers of attorney and some initial protection in place so that we can begin to look at how how their son really needs to work through with them to take over the business.
Lee Kantor: [00:12:22] Now in your career, you mentioned that you’ve had a variety of adventures to get to the place you are right now. Is there anything or anybody that has been especially influential in your career path? Or have you had a variety of mentors or kind of leaders that you looked up to throughout the years?
Don McCrea: [00:12:43] Well, that’s that’s a good question. If I had to pick out one that particularly stood out. That’s Peter Drucker and I was a my doctorate is from Claremont Graduate University and what is now known as the Peter Drucker and Masatoshi Graduate School Management. Peter was still teaching at the time I was there doing my coursework. I managed their executive degree program for a year, including the PhD program, so I had some additional outside the classroom interaction with Peter. But the most brilliant I wouldn’t call him exactly a mentor because he wasn’t specifically a mentor to me. But on the other hand, he was fully engaged with his students, and the wisdom was remarkable in every single class. So he’s the he’s the one that stands out. The rest of it was just having lots of experiences of being open to what comes my way and be willing to learn I every position that I took as I move from one to the next. I had not done before. And so it was a matter of of of learning on the job. And for example, when I when I was first moved into a management position in computer industry, I had been a systems design or systems programmer, system designer, et cetera. Director of engineering moved me into a second level management position. I inherited five managers in something like 75 professional employees. I’d never managed people before, so I spent a lot of time in the office after hours with the director of engineering. Really, I learned tremendous amount from him. He’s unfortunately, since passed away at an early age, but he’s probably the best manager I ever had, and it was a tremendous learning experience. So it’s just it’s learning where that was necessary depending upon the upon the position.
Lee Kantor: [00:14:40] Now when you started this practice, at some point you realized early on I would imagine, or at some point that referrals were critically important to your success. How did you kind of come to that conclusion and what do you do to ensure that those referrals come in and that you can reciprocate back to all of those providers over referrals?
Don McCrea: [00:15:01] Well, a piece of it. A piece of it is is when I actually when I first started this business, I was focused on helping family and small businesses get from wherever they were to that transition point, whether it’s 20 or 30 years down the road, very different than the typical business and strategic planning, which at most focuses on maybe three to five years. And it took me, I did a lot of networking. I’m relatively new here in the North San Francisco Bay Area. I’ve been here about 10 years. Now, and so I had to build business relationships. And what I came to to understand fairly quickly is that it’s the problem you indicated they’re so busy with the day to day. They don’t have time to think that far out. But I’ve done some work with Cal State Fullerton, the Family Business Center there and under, and realized that when they got there, they still were going to have a number of issues. And so I began to. I reoriented the focus of the business developments nine stage process consultative process that underlies everything I do and began to develop the relationships, particularly the relationships with estate planners, financial planners, insurance people, business evaluators, business brokers, et cetera. And I was still out building those relationships with the business community and realized that that that’s that’s a one on one process.
Don McCrea: [00:16:29] It’s an educational process. And so there are a few things like speaking before groups. It can be useful, but even there it, it’s what are the right groups and what are their constituents, et cetera. So it was kind of evolved into, well, evolved out of the discussions that I had with the the estate and financial planners I was developing relationships with because that those two fields in particular are especially important to the owner being ready to retire. It’s part of their personal readiness. Preparation is to make sure they have those pieces in place and then as well business attorneys to make sure that the the business structure, the operating agreement, if there’s a partner, the buy sell agreement are all properly designed. Business structures correct is an LLC or an S-Corp or a C Corp, rather than a nowadays a benefit corporation. I love to work with those people because they have a they have a broader mission in life than just building a business. So it really was evolving, evolving into an understanding of where was the where was the greatest need? Who recognized the problem first? And and and then how could I provide support to them with their clients? So I guess that’s a long answer to to your question. It just evolved over time and recognizing what was necessary for success.
Lee Kantor: [00:17:59] But it sounds like you’re working kind of arm in arm with a variety of trusted advisors to really give a holistic counsel to these business owners.
Don McCrea: [00:18:10] That’s correct.
Lee Kantor: [00:18:11] And then do you do you find yourself as kind of. The quarterback of this team, where are you? Kind of a cog in the machine and somebody else is taking lead or varies depending on the situation.
Don McCrea: [00:18:24] I describe myself as like the conductor of the orchestra who plays some of the instruments. So if you if you look at this nine stage process, things like estate planning, making sure there’s been a, let’s say, if it’s a food business, for example, have they done a risk assessment to really ensure that that they’re all of their processes are as as as health wise, safe as they could possibly be? I am sure there aren’t too many insurance brokers, even commercial insurance brokers who do that kind of an assessment other than what insurance do you need? And so it and then for example, with, let’s say they they they need to restructure the the business. From a sole proprietorship to an LLC or escort business, attorney gets involved. Well, all of those people need to be talking to each other. The estate plan, the financial plan, the the succession planning, the business structure, all of those people need to talk to each other. And so my part of my role is overseeing that team and making sure that they’re working with each other. But then when we get into things like succession planning, success or preparation, looking at the the actual operational structure of the business, is it prepared and developing the the exit plan itself? That’s my those are my areas of specialization. My experience over so many years has been business strategy, business planning, but also leadership and employee development, et cetera. So it’s a piece of it is work that I do directly. A piece of it is is work that I have a strong collaboration with the other professionals that are involved. And and you know, these are licensed professionals which have clear areas of expertize. And I’m not going to even begin to try to duplicate that work. But it is important that that they talk to each other and that’s a part of my role.
Lee Kantor: [00:20:30] Now you mentioned that you work with a lot of family businesses. Is there a niche within that that you work like? Do you work as often with, you know, say, professional services where they’re selling kind of the invisible rather than a food truck or manufacturing? When there is stuff and the things are being sold, that’s physical.
Don McCrea: [00:20:50] Well, you know, I’ve had I’ve had the good fortune of working with a tremendous number of businesses I mentioned. I had almost 30 years in the computer industry, but the later part of that, probably maybe the last half of that was managing sales and marketing organizations. Now the company I worked for, we had a significant number of defense and aerospace clients, but we also had had clients in a variety of other businesses. But then I moved into teaching. I taught for Pepperdine University for five years and included it in their executive MBA program, a top business business marketing all of those people in the executive MBA program. We’re working for a huge variety of businesses, and of course, the work we did in class was a tremendous amount of experiential. And then I manage UC Irvine custom exec ed programs for five years and then UCLA’s for five years, as well as their corporate directors program. And again, the custom executive is is a consultative process as a business and business selling process. And it gave me experience with a lot of different kinds of businesses. And then throughout that, I’ve also been doing small business consulting. So to answer your question, no, there’s no particular niche that I specialize in because I’ve worked with so many different businesses and my perspective is the owner of the business is the expert in their field, and they’re the ones who really know their business. And so when we collaborate, that really brings in the business knowledge and expertize and the ability to work with many, many different kinds of businesses with someone who really understands their business, their markets, their clients well.
Lee Kantor: [00:22:39] And if somebody wants to learn more, have a more substantive conversation with you or somebody on your team, is there a website?
Don McCrea: [00:22:45] I do have a website. Your business legacy dot net.
Lee Kantor: [00:22:50] It’s your everything spelled out your business legacy. Dot net. Correct. Good stuff. Well, Don, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.
Don McCrea: [00:23:01] Thankfully, it’s important to me, too. I come from a family business background. My dad formed his automobile dealership and it’s these businesses are close to my heart to see continue, especially as we’re coming out of the COVID pandemic, but also with the number of baby boomers who are retiring tremendous number of those kinds of businesses. I want to see them all survive.
Lee Kantor: [00:23:27] Yeah. And it’s one of those things where they invest so much of their blood, sweat and tears into something you hate for them to kind of screw it up at the finish line when you can. Exactly. You can kind of plan for things a little bit, and they have a much better outcome.
Don McCrea: [00:23:42] Exactly. That’s exactly right. You’re right on target with that.
Lee Kantor: [00:23:45] All right, Don. Thank you again for sharing your story. You’re welcome. All right. This is Lee Kantor. We’ll see, y’all next time on Coach the Coach radio.