According to the published research of Leon A. Danco, PhD. (“Beyond Survival”) the typical life cycle of an owner-managed business falls into four distinct phases. The Wonder Stage is where the owner often wonders, “How did I get into this mess?” Undercapitalized, overextended, and working seven days a week; most do not survive to reach the Blunder Stage, where big mistakes and 18-hour days become the norm; and the remainder of the failures quit. The Thunder Stage can be recognized when the few surviving businesses thrive, myths develop about the special market niche the fast-growing business controls, and the “secrets” of the business become the hallmarks of success. Ironically, during this stage advisors are desperately needed to begin planning an exit strategy – but the owner(s) distrust advice; they believe they know what’s best for the company, and rely on themselves. The Plunder Stage eventually arrives as the owner(s) lose their appetite for risk and further growth, preferring to keep what they have; the markets shift yet the status quo is maintained at the company. Growth is replaced by stagnation, and is too often followed by an accelerated decline. If the business survives a transition to a second generation, 70% will fail. If instead, the owner(s) embrace the advantages of succession planning, Advisors Trust can help facilitate a successful “CHANGING OF THE GUARD”, for everyone’s benefit and before it’s too late.
