More than 15 Perryville business owners and other community leaders participated in a business roundtable discussion in Fall 2022 hosted jointly by Kline & Co. of Perryville and Archford Capital Strategies, LLC.
During this discussion, Jim Maher, CEO and Founder of Archford Capital Strategies, LLC., asked the business owners for their feedback on business transition planning as background information for the St. Louis Regional Business Owner Research Study being conducted by a local university.
Archford Capital Strategies, LLC, sponsored this study along with other prominent firms to help owners understand the importance of advanced planning in the transition process to the next generation or to an outside buyer.
Archford conducts educational outreach to inform current and future business owners how best to value their business, prepare for ownership transition, and key information on harmonious family-owned business strategies. During this meeting, speakers also discussed the critical value of small and midsize businesses as the foundation for strong community economic development, job creation, and municipal revenue sustainability.
Later in the year, the 2022 St. Louis Regional Business Owner Study was completed with responses from more than 200 business owners throughout the St. Louis Metropolitan region.
“The Perryville meeting helped us to develop the background knowledge necessary to conduct the research study,” Maher said. “The study findings provided business owners with tangible tools to position their companies and set their management teams up for long-term success and growth. Small and midsize businesses are community heroes that provide over 90 percent of the jobs and tax support for local municipal services, such as firefighters, police officers, and teachers.
“It has been a long-term goal of mine to provide these businesses with a strong voice at the table and build sustainable jobs in our communities for the next generation.”
Perryville city administrator Brent Buerck attended the meeting and provide his thoughts on this very important topic.
“Understanding the dynamics of company sustainability in our community helps ensure their longevity,” Buerck said. “Creating long-term sustainable jobs has been a focus of community leaders for decades and is fundamental to our economic growth strategy for the City of Perryville.”
During the Perryville meeting, a panel of key experts led by Maher shared recent business transition trends and also gained a deep understanding of the post-pandemic business environment.
“Small and midsize businesses started by Perry County natives are the economic foundation of our community, so we want to do everything we can to provide them with the best information, resources and expertise,” said Crystal Jones, executive director of the Perry County Economic Development Authority.
Family businesses accounted for almost half of the business owners in this study, and 84 percent were wholly owned by the families. Just a snapshot of some of the critical research findings indicated 55 percent of family-owned firms stayed in business for just one generation, 28 percent lasted two generations, and only 17 percent lasted three generations or more.
This research further indicated 97 percent of the second-generation business owners reported being in the decline stage meaning without further planning, preparation, and innovation, this group of businesses would likely not make it to the third generation.
“With proper strategic planning aided by experienced advisors, these firms build multi-generational business legacies,” Maher said. “This study found that two-thirds of the businesses in a 150-mile radius of St. Louis was no longer growing with many in the decline stage. This coupled with 70 percent of the business owners approaching or past normal retirement age, creating an urgent issue for all our communities to support succession planning for business continuity, but especially to ensure the jobs created by these firms continue.
“Establishing a strong transition team is the key to revenue sustainability and long-term generational success.”
The study emphasized that family planning meetings benefit family members and non-family
member employees.
According to the findings, family meetings allow family members to develop leadership, management, conflict management, listening, and speaking skills. Family members can acquire strategic, capital, estate, or transition planning knowledge. Further, employees can also benefit when family businesses have family planning meetings. The meetings let employees know the family’s commitment to the business’ future and to helping the employees be successful. Specifically, 59 percent of the family businesses conduct family planning meetings, and 41 percent report having had a family planning meeting in the last year.
However, the study noted that only 23 percent of the firms that conduct family planning meetings have an up-to-date family readiness plan.
“From years of family business coaching, I have learned that transitioning a business is sometimes very emotional for the family members directly involved in the business and those who causally participate in business activities,” said Archford Consulting Family Coach Charles Brueggemann. “I often suggest that preplanning and intentional communications are critical in developing more harmonious transitions.”
The study highlighted that most business owners will only transition a business once, so doing it right means doing it right the first time. Even if owners have no intention of selling in the near term, a strategic planning process should be in place to ensure the firm’s growth strategy, job sustainability, and strong economic development foundation benefits the tax revenue base of communities in which the firms operate.
Healthy businesses are the heart of strong community economic development and robust job creation for our entire metropolitan region.
For more information and resource help, check out the 2022 Regional Business Owner Study and/or take a free Exit Map Plan survey to see how ready your business is for ownership transition is available at www.archfordcapital.com.
We want to thank the Perryville business owners and community leaders who provided valued insights to help with the completion of this study.
Dr. Ronda Sauget, Ph.D., MBA, is a strategic consultant with Archford Consulting, LLC, and former executive director and CEO of the Leadership Council Southwestern Illinois and was named to the Most Influential Business Women Class of 2019. Archford Capital Strategies, LLC, is a federally registered investment adviser under the Investment Advisers Act of 1940.
