An estimated 9 million of America's 15 million business owners were born in or before 1964. As a result, there is an estimated $11 trillion that will soon be transferred from one generation to the next. Though these statistics are daunting, the expected shift in wealth will provide plenty of opportunity for businesses to grow through acquisition, or for the next generation owner to revitalize and re-energize his or her organization.
In CliftonLarsonAllen's recently released Manufacturing and Distribution Outlook report, survey results indicate that 45% of respondents expect a leadership transition in the next one to five years. The immediacy of the issue seems to be getting much more attention. This trend is both a risk factor for those who have not planned or prepared for succession as well as a significant acquisition growth opportunity for those with strong leadership and management teams. Historically, investors are attracted to and willing to pay more for businesses that are prepared for a transaction, have strong management, low customer concentration and an execution engine prepared to support growth.
To achieve success, these companies must coordinate people, parts, markets and events on a playing field that is constantly changing and packed with competitors. The winners know that you can't cut corners in this game. It takes a collective commitment to a common goal, along with personal commitment to the role that each person plays in their team's success. There are four engines that drive healthy and sustainable companies:
Leadership. Execution. Growth. Financial.
Business leaders and owners often focus on one engine, but the most successful organizations have the ability to collaborate and integrate all areas when making decisions and driving value for the organization. Excellence in any of these areas can create bursts of short-term success. However, consistent attention to all four creates high-performance organizations that can compete in the global marketplace. The Manufacturing and Distribution Outlook report offers a summary and analysis of feedback received from manufacturing and distribution leaders, including key observations related to each of the four engines.