This is the fourth part of our series this month on business issues we need to keep an eye on as we chart our course to 2030. Please look back at previous columns this month for the myriad of topics already covered, or contact the Southern Midcoast Maine Chamber and we can locate copies for you. Here are two more big issues, which are a little uncomfortable, that we need to begin to focus on now to get us on the right course.

Succession Planning

I’m hoping to create a chamber program as a solution to this problem, but we need to identify the issue first so everyone is aware of it. How many small businesses are we going to lose in the next ten years because there wasn’t a succession plan in place? How many business owners don’t have a plan because they weren’t planning to stop working yet or they thought a family member wanted the business when they didn’t?

Succession planning follows the economic development theory of “it’s easier to keep a business you already have then to find a new one to come to town.”  The issues for succession planning are multi-faceted and difficult so they become easy to push off.

First and foremost, an owner needs to be open and willing to share their business practices and their financials. If a business is going to transfer ownership or be sold, there is a huge amount of transparency needed and some business owners are concerned about being that open.

Secondly, succession planning is difficult because it’s hard to select who is best to take over the business. Is there an employee who has shown the requisite experience? Is there a child who is better suited for it? What if you have both, how do you choose? Deciding on a successor can be difficult. There are other key factors too, including: dealing with your own mortality, how much compensation do you need for retirement, what does the transition look like, will there be any partial ownerships, etc.

There are so many moving parts it really requires a team of specialists. You need a consultant, an investment professional, and possibly a realtor or a lawyer, to help develop a plan. It will take a team to make the right pathway for you.

Bottom line: I hope the chamber can initiate a program in the next 1-3 years to begin to help our businesses with succession planning. I think it would involve a few succession consultants being team leaders and having them build succession planning teams with experts from the chamber membership to help businesses make a plan. Stay tuned.

Roads, bridges and the infrastructure of the state

Road construction is everywhere, amirite? For about 10 months of the year you can find construction zones somewhere in Maine. It’s cumbersome, time-consuming and often keeps us from being on time to our appointments. It’s also another descriptor that we don’t discuss often enough: absolutely necessary.

Without grading the new roads, patching holes and repaving, roads can erode, wash out or become dangerous or costly to drive on. Anyone who has had to pay for a unexpected windshield or tire repair knows how annoying, and limiting, that unexpected expense can be.

However, our infrastructure issue is bigger than just road construction. The issue is this: for years people have wanted to pay as little taxes as possible so they have slashed municipal budgets, school budgets and voted for politicians who propose cuts to state and federal taxes. Taxes stink — I get that. But taxes allow federal, state and local governments to improve our infrastructure in all facets of our lives.

By continually rejecting funding, we invite our infrastructure to literally crumble under our feet. Roads, bridges, internet expansion, clean energy, extended commuter rail, additional school funding and more salt for the winter roads all require infrastructure investments. Bonds have become a popular answer, but that’s borrowing money for another day’s payback and the only reason we’re borrowing is because we didn’t set aside enough money annually to keep up.

So am I advocating more taxes? Not really. But I do think we need to take a look at how we are spending our tax dollars. Using 2015 figures I found online that compared discretionary spending and mandatory spending, I found we spend about $600 billion on our military annually not including an additional $160 billion on veteran’s benefits. Please note, I am not advocating for any reduction to the $160 billion in veterans benefits at all. Period.

We spend $85 billion on transportation and $102 billion on education annually, (so roughly 1/6 of the $600 billion we spend on military). I’m not saying take away the $600 billion entirely because our defense and our soldiers are incredibly valued and necessary. But could we reroute $50 billion to be split evenly between transportation and education?

Maybe we can’t do that for some reason, but I’d like to look at reallocating how we spend the tax dollars to see what we could do. That $50 billion represents an 8% reduction in military spending (and no reduction in veteran benefits) and it would increase education funding by 25% and transportation funding by nearly 30%. What could our schools do with 25% more funding? What would it mean for our bridges and roads to get 30% more improved?

Bottom Line: I don’t know the answers, and some of this is sacrilege for a chamber director to discuss. But I know this: We can’t keep borrowing money and kicking the can down the road to the next generation thinking that a new windfall is just around the corner. If we don’t want new taxes, then we need to reallocate what we have to where it’s needed most. If this budget was for your house and you patched holes in your roof for 30 years rather than replacing it, your house would eventually collapse on itself. Let’s figure this out before our house collapses.

Cory King is the executive director of the Southern Midcoast Maine Chamber.

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