Future-Proofing Your Business
The Importance of Perpetuation Planning
By Vaughn Troyer, CIC, President of Hummel
At Hummel Group, we have been committed to our community since our founding in 1957 by Paul and Mary Hummel. As a locally and privately owned business, we understand the importance of intentional perpetuation planning to ensure our continued success and community impact. Paul’s sons — Bruce, Brian, and Barry Hummel — intentionally planned for their own transitions away from the business. Today, Hummel still values being locally and privately owned, and remaining so is a primary goal around which our long-range planning is centered.
I have personally observed how privately held businesses are vital participants in the local economy. These business owners are personally connected to the success of the community. Often, the privately held businesses give at a greater level to local schools, support nonprofits, or promote civic projects that enhance our neighborhoods. At Hummel, we understand that failing to plan for the perpetuation of a business carries a financial risk with greater consequences than many realize. Our ownership team talks about an issue of perpetuation at almost every monthly planning meeting — it is that important to us. Intentional business perpetuation planning offers several key benefits that can significantly impact a business’s longevity and success of a business, in the following ways:
1. ENSURES CONTINUITY: It helps ensure that the business can continue operating smoothly even after the current leadership steps down or retires. This is crucial for maintaining client relationships and business operations and has a direct impact on your employees.
2. PRESERVES BUSINESS VALUE: By planning ahead, you can preserve the value of your business and protect it from costly disruptions. Business owners should recognize that failure to plan for the transition will likely cost them thousands or millions of dollars of valuation.
3. FACILITATES EMPLOYEE SUCCESS: Perpetuation planning provides a clear roadmap for succession, identifying and preparing future leaders within the organization. This helps ensure seamless transitions and reduces the risk of leadership gaps. Developing the next generation of leadership now results in greater success today, not just in the future.
4. ALIGNS WITH PERSONAL GOALS: It allows business owners to align their personal financial goals with their business goals, ensuring that their exit strategy supports their personal plans and time frame.
Have you started thinking about your own business perpetuation plan? If not, now is the time to act. Reach out to your Hummel advisor, or consult with your trusted legal or tax counselor. Don’t delay—your future self and business partners will thank you. – Vaughn Troyer, President of Hummel
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