How long do you plan to be in this business? Part 2

June 20, 2019

how-long-plan-business (2)

In the last article, we looked at what information companies in the Hit and Quit and the Short Range-Long Term needed in order to be successful. In part two of our series, we will discuss the final two categories of the question, How Long Do You Plan to be in This Business?

  • 100 Year Company: 100+ years
  • Legacy Builder: 100+ years, plus other factors

Before we begin discussing what is needed from a financial standpoint for each of these categories, let me clarify how companies in these categories think. Their thinking is different from the first two categories we discussed in the last article.

These companies follow, at least, these three philosophies:

  1. Companies in these categories believe they will be around for 100 years.
  2. Companies in these categories are realistic regarding what could go wrong with their business and do not prepare overly optimistic financial scenarios.
  3. Companies in these categories realize they will need to evolve to meet challenges; changing simply will not be enough.

The philosophies above come from the CEO. It’s the CEO’s job to communicate the vision of the company. Once a 100-year company is communicated, short and long term goals should be constructed to accomplish that vision, using the philosophies above. Although it may not seem that the three philosophies above have anything to do with the finances of the company and how a trusted advisor would help the company, but they do.

Companies in the 100 Year Company category focus on building and defining who and what the company is. Working with and developing the next generation of leaders, usually family members, is also important.  A good trusted advisor will explain the need to provide you with the following information to achieve your goals such as:

    • Information Gathering and Client Retention: Companies in this category will look at their customers and how they purchase their services. For example, is your client base more interested in interacting with you using technology versus direct communication? Do your customers value certain services you provide over another? How do you provide more of those services and charge for it? Do you have to educate your customers about new products or services that you know they will need before they do?
    • Realistic Financial Budgeting and Forecasts: The growth rate for a company may be double digits for the first 10 years of the company’s life, over time that rate will come down, level off, and potentially decrease. Companies need to position themselves to have working capital not only for their current needs but also capital for expansion plans. Budgets that are unrealistic may not allow the company to pivot to meet its needs or the needs of its customers.
  • Tax Implications/Structure: Important to any business, businesses in this category should be concerned about how their structure affects their tax liability, along with the continuity of the business. It’s possible the next generation of leaders will not come from within the company or those family members will not want to directly run the company once the founder has passed. Setting up the company so that it, and its vision, is around for 100 years is very important.

Companies in the Legacy Builder category are rare. The ability to achieve a 100-year company is difficult. Building a company that surpasses the 100-year milestone is very difficult. How many companies in your community do you know that are 100 years old or more? A good trusted advisor will explain the need to provide you with the following information to achieve your goals such as:

  • Quality Product/Quality Service/Quality Reputation: A trusted advisor realizes that the business is more than just numbers on the financial statements. It’s about customers, service, and reputation. Businesses in this category realize that customers patronize them because they receive value for their money, and they have an excellent reputation in the community. Reputation is capital for these companies. Financial decisions should be made with the goal of protecting it.
  • Innovation: Improving processes and services to meet customers’ needs is important for any business, but it is particularly important for businesses in this category. Just as being around for 100+ years can be a benefit to a company, it can also be a detriment. A trusted advisor will be able to explain that the message of the company is one of stability but not stagnation.
  • Tax Implications/Structure: Companies in this category have a structure that is fully developed. Second and possibly third generations are involved with the company. A good trusted advisor will be able to provide those owners with the information and guidance needed to continue with the original vision of the founder.

As you can see, items that are important to businesses in the Legacy Builder category are important to businesses in the Hit and Quit category. We can see constants that transcend all categories, the most important of which is the CEO being the CEO. The CEO is the person with the vision and the person that is going to communicate that vision. Trusted advisors provide you with the tools used to communicate that vision.

Topics: business management

Mark Puzdrak


Mark Puzdrak is a Certified Public Accountant (CPA) with more than 13 years of professional experience helping small to medium-sized businesses with their tax and accounting needs including individual, corporate, and partnership income tax returns along with business and individual tax planning. Mark is a member of the American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants. He is licensed as a Certified Public Accountant in Texas and Pennsylvania. He earned both of his bachelor of arts degrees in accounting and finance from Lycoming College in Williamsport, PA. Mark is committed to delivering tax and planning services that meet each client's unique objectives with a focus on services for small to medium-sized businesses as well as clients in the Real Estate, Manufacturing, Entertainment, and Professional Services industries. Mark lives in Austin, Texas with his wife, Kelly. He enjoys reading biographies, visiting small Texas towns, and the occasional scotch and cigar.
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