Avionics News March 2012 - 59

The flip side is the owner who wants to create a legacy that outlasts him or her. Doing so requires building a business with actual value that can be passed along or cashed in by heirs. In this case, it’s not about the owner, which requires a different mindset. “It’s about what’s best for the business,” Aronoff said. “If I want to create a situation where I can maximize value, then I’m going to have to pay attention to building an extremely good business,

function well without you,” Aronoff said. While there’s no specific age for riding off into the sunset, avionics shops aren’t the airlines, and no one will force you into retirement at age 65. However, there are some considerations, such as whether or not you have the motivation, energy levels and aptitude for the changes in the industry and technology, or even your faith in the future of the aviation economy. When those fade, and it isn’t fun anymore, it may be time to step aside.

While few entrepreneurs have fully considered their exit strategies, the simple act of doing so can give the business room to breathe and g r o w, w h a t e v e r y o u r p e r s o n a l f u t u r e h o l d s .

with an extremely good leadership team, a well-defined competitive advantage and systems, processes and procedures that assure this business runs without me.” This is the “final test of greatness” for a business owner, according to the late business thinker Peter Drucker. It’s also the key to one particular exit strategy: providing maximum value, regardless of whether it’s sold, assumed by the next generation of the family or continued by other partners, Aronoff said. Deciding whether this or the former option is right for your business takes honesty on your part, as well as the ability to let go. And, know when the time is right. “If your goal is for your family to realize the value of what you built over your career, then it’s when you have that business up and ready for transition, primarily by creating situations so the business can

Growing for a Change Your near-term objective may be to put the business on solid operational footing so someone else can run it. That’s the first step in letting go. “Once you’ve done that, you’ve given yourself tremendous freedom, and you can come or go,” Aronoff said. Indeed, a successful business not only allows you to step aside, it also creates the profitability to make that financially possible. Making it happen is fairly logical, though not necessarily easy. Determine where you are now, where you need to go and how to get there. Here’s a hint: you want good governance, the ability to delegate to a qualified team of managers and subordinates, a succession plan that includes development of the next generation of leaders and the operational processes that don’t require day-to-day handholding. If you can take a vacation

for a month and still have something to come home to, you’re on the right track. But, you need staff that is growing in responsibility, scalable operational systems and good customer, supplier and bank relations. In other words, you need to use your business expertise to phase yourself out. “Over time – and you can almost draw this on a graph – the next generation’s responsibilities are going to go up, and the former generation’s responsibilities are going to go down,” Aronoff said. “At some point, they’re going to cross. After that point, more freedom is there for the older generation to leave.” Be advised that you will complicate this if you don’t really want to let go. If you want to make all the decisions or second-guess any that are made, you have another problem. You may poison the punch bowl for those you need to carry on. Instead of being the honored elder who doesn’t meddle, you will make the next-generation leaders and potential buyers reconsider their future with your shop, leaving you unable to step aside. This is a bigger problem if you have sacrificed your personal finances for the benefit of the business, Aronoff said. If your shop still provides part of your monthly income, you’re less likely to go, if only to protect your salary, dividends or other sources of income. Ideally, you started taking some money from the business in your 30s or 40s with a real salary that allowed you to save and a company retirement program to build financial independence, Aronoff said. Ultimately, though, the business is an asset, and you will receive that value only by divesting the shop. However you
Continued on following page
• 2012

avionics news

march

Avionics News March 2012

Table of Contents for the Digital Edition of Avionics News March 2012