A new center launched earlier this year by Bank of Hawai‘i aims to help business owners plan for growth, transition and the future.
The Center for Family Business & Entrepreneurs was created for family-owned and closely-held businesses, an announcement from BOH noted.
"Bank of Hawai‘i created the Center for Family Business and Entrepreneurs, as we've really come to discover that for business owners, particularly family business owners and our closely held business owners, at some point in their business-owning journey, their decisions become deeply interconnected for both the business, the family, their personal wealth," CFBE Director Agatha Viernes-LeGros told Aloha State Daily in June. "We really see that there's a need to support these business owners as they evaluate different milestones on their journey — particularly as they look toward succession and exit of their business."
The center formally launched in April, but Viernes-LeGros says the idea has been percolating for much longer.
"I give credit to our executives here at Bank of Hawai‘i for recognizing that our business owners have needs outside from core banking services," she says. "They have needs as it relates to their business succession and personal wealth strategy and planning, so it's taken a bit to get to this point. ... It's been probably a year-and-a-half, maybe even almost [a] two-year journey, and that's really been because we wanted to be thoughtful about how we're sharing with our community what we're doing."
Viernes-LeGros says CFBE aims to provide education, advice and hands-on execution of planning services to clients in a confidential manner, bringing together expertise in commercial banking with what the bank does in the wealth management space, "to really provide these comprehensive and connective services to our business-owning community."
The center finds that as clients start to evaluate major decisions, whether it's continuing to reinvest in their business or stepping away, they often times don't know how to do so, she told ASD.
"We find these business owners, they're the ones that built their business up from the ground up, and as much as they're skilled at running their business, they're not skilled at what comes next," Viernes-LeGros says. "... You oftentimes hear businesses closing their doors, and that's unfortunately becoming an all-too-common story these days, and that could be because they may not have a named or a known successor. We see that family businesses, they've done a great job of building wealth — not just for their own families, but also in their communities, reinvesting in their communities — and as their own children grow up, they find that they've got other interests, start other careers and they don't really have this ability to come back and run the family business. That leaves business owners with not really understanding what's the next step for them."
CFBE has resources to help those business owners look at and evaluate what options are available.
According to BOH, research shows that as much as 70% or more of their personal wealth is tied up in their companies, which makes decisions about succession, transition and continuity "deeply personal as well as financial."
When asked what these business owners should know about or be mindful of during the succession planning process, Viernes-LeGros says the biggest pitfall they see business owners fall into is waiting until the last minute.
"I think that is a critical aspect of thinking through one's succession and transition is that you really should be doing it well in advance," she told ASD. "We're talking even up to years in advance of when you really intend on exiting a business because there's certain tax strategies, changes to the way your business is organized, gifting strategies ... that require planning in advance to make sure you can best take advantage of the different tax benefits out there. If they wait to the last minute and they make these changes say a year, six months out from when they plan to exit their business, they may not be able to get the full benefit of the tax strategies that they're trying to implement."
Additionally, Viernes-LeGros says it can sometimes take years to empower a successor and remove owner dependency from a business.
"That's another area where we can see some pitfalls for business owners as they think about exiting, is they're so critical to the day-to-day ... but if they get all of their ideas, get the secret sauce down on paper, so to speak, maybe locked away, but out of their head and onto paper, that really helps for a business to succeed and continue on, and well into the future."
Want to learn more? You can get more info at the center's website here or by email cfbe@boh.com
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Stephanie Salmons can be reached at stephanie@alohastatedaily.com.
