search
cart
facebook twitter linkedin youtube instagram Spotify Podcasts Apple Podcasts Spotify Podcasts Apple Podcasts
  • Sign In
  • Create Account
  • Sign Out
  • My Account
  • NEWS
  • TOPICS
    • Cool Roofing
    • Event News
    • Latinos in Roofing
    • Low Slope
    • Legal
    • Metal
    • Project Profiles
    • Roofing Supply Pro
    • Roofing Safety
    • Steep Slope
    • Sustainable Roofing
    • Technology
  • EXCLUSIVES
    • Best of Success
    • Contractor Profile
    • IRE Show
    • Roofing Contractor of the Year
      • Enter Roofing Contractor of the Year
    • Top 100
      • Enter the Top 100
    • Young Guns
    • State of the Industry
    • Century Club
  • MULTIMEDIA
    • Videos
    • Podcasts
    • Interactive Spotlights
    • Roofing Quizzes
    • IRE Videos
    • Webinars
    • Photo Galleries
  • PRODUCTS
    • New Products
    • Featured Products
  • COLUMNS
    • Editor's Note
    • Exit Planning
    • Legally Speaking
    • Safety Advice
    • Technical Details
    • Guest Column
  • EVENTS
    • International Roofing Expo
    • Webinars
    • Best of Success Conference
    • Industry Events
  • DIRECTORY
    • Associations
    • Distributors
    • Manufacturer/Supplier
    • Business Services
    • Get Listed
  • MORE
    • Roofing Contractor eNews
    • RC Store
    • Roofing Supply Pro
    • Custom Content & Marketing Services
    • Market Research
    • Sponsor Insights
    • Company Spotlights
    • Classifieds
      • Auctions
      • Business For Sale
      • Business Opportunities
      • Equipment For Sale
      • Positions Available
      • Products
      • Safety
      • Software
      • Services
      • Training
    • Contact Us
  • EMAGAZINE
    • eMagazine
    • Advertise
      • Media Kit
      • Editorial Calendar
      • Contact
    • Archive Issues
  • SIGN UP!
Columns

Succession Planning: So, Where Is My Government Bailout Program?

By Kevin Kennedy
November 6, 2009
All of us have watched as the government has budgeted over $2 trillion to banks, insurance companies, federal and state governments, and struggling auto manufactures. Ever wonder where all this money is going or coming from? Of course, we will never see any “bailout” money gifted to support our small businesses, which drive job creation and pay the taxes to support the overall government and the economy. So what are small business owners to do?



All of us have watched as the government has budgeted over $2 trillion to banks, insurance companies, federal and state governments, and struggling auto manufactures. Ever wonder where all this money is going or coming from? Of course, we will never see any “bailout” money gifted to support our small businesses, which drive job creation and pay the taxes to support the overall government and the economy. So what are small business owners to do?

In a climate in which stock prices are falling and home values are declining, the key to financial security just might lie in the business itself. Private roofing companies are business survivors who have hunkered down to cut costs, review all efficiencies and drive managers to do more with less. The good news is that our company stock is private, and it’s not directly affected by the public stock market swings that have resulted in the losses in our 401(k) plans.

The largest asset of most private owners is their business, which houses their trapped wealth (equity) and provides the income to support their lifestyle. During this difficult time we need to protect this wealth; have systems in place to drive efficiencies, quality and safety; and lead our company through a critical learning stage.

A larger question is, “What is your plan?” That is, once you are through this period, how do you plan to eventually monetize this asset - business equity - protect your illiquid wealth and move into your next stage of life? The answer is a written exit plan, and you need to begin this process now to position yourself for the future.

Simply put, exit strategy provides a customized, written plan that defines the owners’ personal and financial goals and chooses the best vehicle to transfer and monetize their business and as they move into their next stage of life. The plan puts the owner in control of a process that takes several years to execute. During this challenging business climate, owners will need to concentrate on rebuilding their business’ value, succession and business growth, so everything is orchestrated for the timing of the exit.

This article will concentrate on two internal transfer options: an employee stock ownership plan and a management buyout. (It does not consider an external sale such as an IPO, sale to a competitor/consolidator or a private equity group.)

Utilizing Government Tax Benefits

Let’s talk about the managers who work in your business. About 30 years ago, the lawmakers in the United States assessed that it was unlikely that “rank and file” employees would ever have the chance to acquire an ownership role in a private business. Accordingly, the government provides tax incentives to encourage business owners to transfer a portion of the wealth to the employees. The vehicle is called an employee stock ownership plan (or ESOP).

Now, under this premise, you, as an owner, can trade ownership in your business for cash out of the business in a very tax-efficient manner (corporate and personal tax). And, if cash is unavailable to withdraw from the company, you can take a note and earn interest on your money. You can do this and still maintain your job with financial and strategic control.

Is this a recovery plan? Well, maybe not for the business, but it certainly can be for the owner’s personal balance sheet. You see, other buyers may not be out there to purchase your business today. But that does not mean that you cannot create a buyer (with tax incentives to boot) and begin the process of transferring your wealth to another owner - in this case the ESOP trust.

One Man’s Trash …

A second alternative for your “troubled asset” is a sale of the business to your management team in the form of a management buyout. This is a good choice if you have a capable management team that has the talent to move into the next level and management systems that measure results. In this case it may make perfectly good sense to begin a discussion with your managers about taking an ownership role in the business today.

Think about it - by aligning your interests with your managers, you are able to encourage them to work harder and smarter through these difficult and challenging economic times. When it is difficult to incentivize them with cash, try having them share in your burden of ownership by awarding them some illiquid stock. Then, depending upon how that goes, advance the conversation to whether these owners would like to begin taking a larger role in the future management and ownership of the business.

Many employees may perceive this as a once-in-a-lifetime opportunity to own a piece of the business that they have been helping to build for a number of years. Accordingly, you as the owner should be prepared to share many of the responsibilities of decision making in the business with these managers. Your exit and succession plan will only succeed if the business can run without your presence. You may find that your “troubled” asset is suddenly looking a lot more favorable now that your managers are on board to take over the future management of the business.

Creative Solutions

So, although the government is not going to step in and bail you out of your “troubled” business, there are some creative ways to establish your own “recovery plan.” Look to the tax code and your management team to establish a creative way to design your own exit from the business. At the very least, examining these options is also good business practice, as it expands your imagination to address the issues that you are confronted with today.

Remember, creativity is still the lifeblood of small business. Begin to get creative about your exit options. Begin to think differently about your business - and your exit - and you will see opportunities for your exit that you never saw before. The key is to understand there are several paths to monetize your business wealth and create a written exit plan to execute and measure the process.

Share This Story

Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!

Kevin Kennedy is the founder and CEO of Beacon Exit Planning. He is a former roofing contractor, construction industry voice and thought leader for exit planning and succession. Kevin is also a co-author of the Amazon #1 Best Seller “The Contractor’s 60 Minute Exit Plan.” Reach him at kjkennedy@BeaconExitPlanning.com or www.beaconexitplanning.com.

Recommended Content

JOIN TODAY
to unlock your recommendations.

Already have an account? Sign In

  • Roofing Contractor Group Publisher Jill Bloom

    Physics, the Power of Authenticity and You

    In February's Publisher's Note, Jill Bloom describes a...
    Editor's Note
    By: Jill Bloom
  • The Family Food Fare supermarket in Midland, Mich.

    ‘Rooftop Ninja’ Discovered Living on Roof, Inside Grocery Sign

    A bizarre tale out of Midland, Mich.: a woman dubbed the...
    Roofing News
    By: Bryan Gottlieb
  • A before and after heat measurement comparison

    How Hot is Too Hot in the Attic?

    If the ventilation is working, how hot should the attic...
    Columns
    By: Paul Scelsi
You must login or register in order to post a comment.

Report Abusive Comment

Subscribe For Free!
  • eMagazine Subscription
  • Sign Up for the eNewsletter
  • Online Registration
  • Manage My Preferences
  • Subscription Customer Service

More Videos

Sponsored Content

Sponsored Content is a special paid section where industry companies provide high quality, objective, non-commercial content around topics of interest to the Roofing Contractor audience. All Sponsored Content is supplied by the advertising company and any opinions expressed in this article are those of the author and not necessarily reflect the views of Roofing Contractor or its parent company, BNP Media. Interested in participating in our Sponsored Content section? Contact your local rep!

close
  • An overhead view of a residential block
    Sponsored byCBIZ CompuData

    From Spreadsheets to Strategy: How Roofing Companies Can Transform Financial Operations

  • Snow Guard Solutions for Metal Roofs by S-5!
    Sponsored byS-5!

    Safeguard Your Building: How Snow Guards Prevent Costly Roof & Property Damage

  • A hand holding a wooden block that reads 'EVOLVE'
    Sponsored byWatercress Financial

    Embracing Change: A New Era for the Roofing Industry

Popular Stories

QXO closed its acquisition of Beacon Building Supply on April 29, 2025.

QXO Closes Beacon Acquisition, Rebrands Immediately; Jacobs to Ring NYSE Bell

New executive orders signed by President Trump will likely further constrict an already tight labor market for the construction industry.

New Executive Orders Will Further Squeeze Labor Force

A bill under consideration in the Louisiana State House would bar roofing contractors from helping homeowners file or negotiate insurance claims.

La. Weighs Banning Roofers from Assisting with Insurance Claims

Roofing Contractor Webinar

Events

May 22, 2025

Remote Teams 101: The New Way to Hire

Our industry experts will guide you through what remote hiring and outsourcing should look like, how it can help you grow, and why it’s easier (and less scary) than you might think. If you want to save time, find great talent, and grow your business, this is one session you don’t want to miss!

December 3, 2025

The Premier Roofing Conference: Best of Success

Join roofing professionals from across the nation at the 2025 Best of Success conference, the ultimate destination for roofing professionals seeking the latest industry insights and networking opportunities. Pick up strategies for critical challenges like workforce shortage with innovative solutions, explore the latest advancements in roofing technology and sustainable practices, and gain valuable insights from industry leaders on navigating the evolving roofing landscape.

View All Submit An Event

Related Articles

  • EP_Img01.jpg

    Selling Your Business is Not Like Selling Your House

    See More
  • Is your company a target?

    Why a Roofing Company Becomes a ‘Target’ for Acquisitions

    See More
  • A man doing accounting work making a displeaased face

    Stop Overpaying ‘Exit’ Taxes

    See More
×

Be in the forefront of the roofing industry!

Join thousands of professionals today. Shouldn’t you know what they know?

JOIN NOW!
  • RESOURCES
    • Advertise
    • Contact Us
    • Directories
    • Store
    • Want More
  • SIGN UP TODAY
    • Create Account
    • eMagazine
    • eNewsletter
    • Customer Service
    • Manage Preferences
  • SERVICES
    • Marketing Services
    • Reprints
    • Market Research
    • List Rental
    • Survey/Respondent Access
  • STAY CONNECTED
    • LinkedIn
    • Facebook
    • Instagram
    • YouTube
    • X
  • PRIVACY
    • PRIVACY POLICY
    • TERMS & CONDITIONS
    • DO NOT SELL MY PERSONAL INFORMATION
    • PRIVACY REQUEST
    • ACCESSIBILITY

Copyright ©2025. All Rights Reserved BNP Media.

Design, CMS, Hosting & Web Development :: ePublishing