Succession planning important for family businesses

Succession planning could be the key to keeping the wealth in a family business when it’s time for the owner to retire.

According to Chris Torres, Enterprise Bank & Trust vice president, wealth adviser team lead, any successful transition needs to be well thought-out, and it needs to be done over a period of time that is commensurate with the level of decision.

“We find that businesses that are successfully transitioned are ones that have thought about it from all different angles,” Torres said.

The business owner needs to look at it not just from the owner’s view of what is the best way to maximize their value and create a cash windfall, but also to determine what’s best for employees at all levels, what’s best for customers, suppliers and other organizations they work with in the marketplace, Torres said.

Part of his job in succession planning is to help customers look at those angles and make sure they know how it will be received by different groups.

The businesses most successful at succession planning have put a lot of time and thought into it and have brought a lot of resources to it, according to Torres. They get an independent audit, have a business valuation, and work with experts in the field to do succession planning, he said. They make sure their expectations are in line with reality and also will know if the expectations are in line with others involved in the business.

“Those who are unsuccessful are looking at it from a singular point of view, and not giving it as much planning and thought process,” Torres said.

Having a succession plan also is a good idea for those who don’t want to sell their business. A partnership may need a buyout arrangement in case something happens to one of the partners, such as disability, he said. A mechanism would be put in place to buy that partner out.

“Succession planning should be a part of the planning for any healthy business,” Torres said.

If an owner is serious about selling a business or passing it down to the next generation, or to the employees through a stock-purchase program or to a third-party organization, it’s an 18-to-24-month process once they start, he said. It could be longer, depending on the complexity of the organization, he added.

“While it’s not a magic formula or exact time frame, you need to be investing years into executing this, rather than weeks and months,” Torres said.

In a worst-case scenario, if the business owner dies and no one, the next generation nor surviving spouse wants nor has any interest in or skill sets for it, the business could close and the family would receive no value from it, he said.

“In most cases, this is not the case,” Torres added. Usually there is some element of management and other employees who want to continue that business moving forward, he said. A succession plan may try to engage that group in running the business, with an opportunity to sell it to them or work with a business organization looking for potential suitors, he added.

“A great deal of wealth can be taken away if there is not some thought to how we plan for tomorrow,” Torres said. “The goal is to have a successful transition so the business continues to function, just as it did with the previous owners.”

A good transition is a seamless one, with business as usual, he added.

Torres said Enterprise Bank, which has a location at Prescott Plaza, 18th and I-70, specializes in family-owned businesses and has helped businesses through a lot of transitions through the years. Torres’ office is in Johnson County.

“We know how to objectively value businesses,” he said. The bank has experience in determining the worth of a business, and is able to quarterback the succession process, he added. If they don’t have resources in-house, he said, they can bring them into the process.

Getting the structure right as ownership is transferred from an existing structure, whether to a family member or a third party, is important, Torres said, and it has a lot of effect on the business long-term.

Legislature to deal with property taxes

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Opinion column

by Murrel Bland

The Kansas City, Kansas, Area Chamber of Commerce is drafting its annual legislative agenda as the Kansas Legislature will soon meet for its 2019 session in Topeka. Members of the Wyandotte County Legislative Delegation met with members of the chamber’s Legislative Committee Friday morning, Dec. 15, at the Chamber office.

Property taxes are sure to be an issue this legislative session. That issue is particularly important to Tony Privitera who is the incoming chairman of the chamber. He has seen values of commercial property he owns in the Fairfax Industrial Area jump as much as 100 percent.

The chamber’s proposal concerning property taxes favors a system that phases in changes to appraised value over several years. This would allow businesses to plan for and budget for tax increases. It also would allow local units of government time to adjust for revenue increases or decreases. Such a plan might be similar to the valuation used for agricultural land which is valued according to a floating eight-year average.

The chamber is proposing to oppose any funding formula that would place an undue burden on local property taxpayers. This chamber proposal is still in the draft stage and is subject to change.

There will probably be legislative action next year on sports gaming as it is now legal according to federal court action. The chamber is proposing to support sport wagering. It is uncertain who would administer sport wagering; It has been suggested it might be the existing Kansas casinos. This proposal also is in the draft form and is subject to change.

Turning to federal issues, the chamber is proposing to support a fair, accurate and complete count for the 2020 Decennial Census.

The chamber has supported a federal resolution when dealing with immigrants who are already here; this federal resolution should address situations compassionately.

The Board of Directors of the chamber will review the legislative agenda by the end of the year.

Murrel Bland is the former editor of The Wyandotte West and The Piper Press. He is the executive director of Business West.

KC Foodie Park at Indian Springs on tonight’s City Planning meeting agenda

A plat of the KC Foodie Park is in the agenda for tonight’s City Planning Commission at 6:30 p.m. at City Hall. To the right of this plat are proposed restaurant sites along State Avenue.

The KC Foodie Park proposed for the old Indian Springs mall site at 47th and State Avenue is on the agenda for tonight’s City Planning Commission meeting.

The meeting will begin at 6:30 p.m. Monday, Dec. 10, at the Commission Chambers, lobby level, City Hall, 701 N. 7th St. Kansas City, Kansas. According to the agenda, a public hearing on the project is included in the meeting.

The project is seeking a change of zone from planned business park, planned commercial and planned limited business districts to planned light industrial and industrial park, planned non-retail business and planned general business districts for a mixed use development.

Distribution, food service center, office and commercial space are planned for the 49.2-acre former Indian Springs Shopping Center site. The site addresses listed are 4600 Orville Ave., 4601 State Ave. and 4602 Orville Ave. The site is located near the intersection of I-635 and I-70.

A final plan review and preliminary and final plat of KC Foodie Park also are on tonight’s City Planning Commission agenda.

According to agenda information, it will be a 234,716-square-foot distribution and food service center, also with office and retail buildings.

According to the agenda document, there has been no public opposition so far to this project. The Unified Government planning staff recommended approval of the project if the developer complies with all of its stipulations on the plan.

If the project is approved by the Planning Commission, next it would go to the Unified Government Commission for approval.

The applicant, Scavuzzo’s, is represented by the Polsinelli law firm in this zoning application. Richard Scavuzzo, chief executive officer of Scavuzzo’s, spoke at a community meeting on the proposed project in November.

About 75 persons attended the community meeting on the proposed project on Nov. 28 at the Painted Hills Country Club at 71st and Parallel Parkway, Kansas City, Kansas. At that meeting, community residents asked the developer to include minorities in the firms working on the project as well as in the employees there. Also, Kansas City, Kansas Area Chamber of Commerce members asked for inclusion in the project.

Information from that earlier meeting included:

Three proposed pad sites along the north edge of the development would be restaurants, Scavuzzo said. A little south of that would be more restaurants, some retail, and food service-based home delivery customers, he said. The order and delivery concept is popular with retail and would be brought to food service. He also mentioned a convenience store as a possibility.

A four-story office building would be the headquarters office for Scavuzzo’s, he said. It would include a test kitchen and offices, with space for culinary training for students. Other tenants also would be located in the office building.

A food service center building on the south side of the property would replace Scavuzzo’s current operations, he said. The facility would produce more energy than it would consume, he said. There would be a solar farm on the property, he added. The goal will be a gold-level LEED certification for the facility, he said. Trucks will be limited to the southeast side of the property, he said.

If approved, a small family-owned food service company could set the pace in its industry through innovation, he added.

In answer to a resident’s question, Scavuzzo said that his company currently has a little more than 100 employees and he would expect that number to increase to around 200 with the new development. The jobs would pay around $20 per hour, he said. Currently, there are five Wyandotte High School students working with his company in an after-school program, he said.

For an earlier story on the KC Foodie Park proposal, visit http://wyandottedaily.com/kc-foodie-park-proposed-for-indian-springs-site/

The Planning Commission document for the foodie park is at http://public.wycokck.org/sites/planning-agendas-minutes-staffreports/Agendas/COZ%203174%20and%20FINAL%20PLAT%20KC%20Foodie%20Park%20and%20PR-2018-36.pdf

A rendering of the Scavuzzo distribution and cold storage facility proposed for the Indian Springs site is included in the agenda documents.

A rendering of the Scavuzzo distribution and cold storage facility proposed for the Indian Springs site is included in the agenda documents.
Developers showed a map of the proposed development at the Indian Springs mall site at the community meeting Nov. 28. The map is not final, according to developers. (Staff photo)