If the answer is no, start the process of creating one now. It will truly change your business and greatly help your management team focus on the right goals.
Most CEOs I meet wish such a plan existed. It is a guide for them to operate. It is a foundation for the Board (or “Oversight group”) to evaluate management. I have participated in way too many board meetings where we shoot the breeze over results and forecasts without knowing what the owners expect from the business.
An Owners Plan is a written document created and shared by the owners providing Management and the Oversight group clear expectations for operating, managing and growing the business. Every plan is different, but all include some of the following:
- Values to Manage the Business
- Financial Performance Expectations (i.e., equity value, EBITDA growth, NOI growth, etc.)
- Dividend Expectations (i.e., fixed amount, % of value or % of NOI, etc.)
- Family and Owners Employment Policy
- Ownership Policy – who are permissible owners?
- Owners Diversification Goals
- Oversight Structure
-For example, a board with x outside and x inside directors
-A clear statement of purpose for the Oversight group (i.e., balance
and reconciliation of plans, management results and
expectations, etc.) - Risk Management in specific areas such as industry, competition, government influence/regulation, cyber, litigation and financial
- Owners Meeting Schedule and Agenda
These are a few examples of plan specifics. Each plan needs to be tailored to ownership needs and goals. A good Oversight group should review, and if necessary, challenge items in the plan that are unclear or unrealistic. Once established, the plan should be reviewed annually, appropriately modified, vetted by owners and the Oversight group and presented to management. Communicating it frequently to management is very important.
A detailed Owners Plan creates a strong vision, a strong Oversight group, a strong management team, and ultimately a stronger business.
Party on the River
Sunday was the first Kurt Jorgensen Band night of 2013. A Sunday tradition. My honey, Jan, and I couldn’t miss it. Great music, people watching and I was awesome on the dance floor again. I know, in my dreams.
Understanding the tax law and advising individuals, families and closely held businesses on tax matters is my passion. For fun, I read the tax code – that’s the truth - attend Rolling Stones concerts whenever and wherever possible, and go boating in Fort Myers Beach and on the St. Croix River.
