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Brad Franc has been an attorney at Houston Harbaugh, a full-service business law firm, for 25 years, serving in the past as President and as a member of the Firm’s Executive Committee. He concentrates his practice in the areas of business planning, commercial transactions, federal and state tax issues, and estate and succession planning.
MO: In addition to practicing corporate law, you’ve founded three successful businesses. First of all, how did you manage to find the time? Second of all, where does your strong entrepreneurial streak come from?
Brad: I think the key to making the most of time comes down to two things: people and planning. I challenge you to find a successful business person who does not have a team of committed professionals that play an active role in the advancement of a vision. And, in order to reap the benefit of the energy and intellect of my team members, we spend time putting together a plan which is then executed by capable team members.
As far as an entrepreneurial spirit, I have my parents to thank for that. They taught me that if I wanted something, I was responsible for making it happen. With that mantra I learned early the value of hard work. The day I turned 16, I went searching for a first job (I had already been delivering papers for many years)…setting my sights on saving for a car. Well, I bought that car, and the realization that I can accomplish what I put my mind to set the stage for my entrepreneurial endeavors and legal career.
MO: What are some of the most common issues you see entrepreneurs having and how can they be avoided or corrected? How has being an entrepreneur yourself influenced the insights and advice you’re able to offer your clients?
Brad: Entrepreneurs must realize that risk is not a bad word when it comes to business planning. In more cases than not, risk equals opportunity…but only if you take a step back, assess the situation and look for the opportunities. I have been faced with risk when starting my own businesses. Had I gone running the other way as soon as a problem surfaced, I never would have found success.
Another issue I see entrepreneurs facing, especially in the early stages of their company, is not staying focused on the financial strengths and weaknesses of a business. Financial data can indicate areas of concern in a business’ operations before they turn into full-fledged problems. With my own experiences to learn from, I encourage entrepreneurs – really, any business owner – to develop key financial indicators and review them constantly to make sure the numbers are where they should be.
Being an entrepreneur – and a CPA and a lawyer – has exposed me to all sides of the table. I have come to appreciate that the most conservative legal answer to an issue is not always the best business answer. In other words, the business advice I typically give is that one should consider the legal perspective but it doesn’t have to drive the result. I coach business owners to look for practical answers.
MO: What inspired you to develop the Succession Solution? C
Brad: Working with business owners – and in my own businesses – for 25+ years, I have witnessed the emotional anxiety that planning for the future has on the business leader. I observed a recurring situation where even the brightest, most successful and confident business owners were not comfortable with one factor that triggers the need for succession planning: their own mortality. Even those who are not daunted by the future often avoid planning without a process to navigate through the various areas of consideration in succession planning. The end result was the development of the Succession Solution, which embodies the best practices – and avoids the common mistakes – that I have experienced throughout my career.
The Succession Solution helps to ease the emotional burden of planning for a time when the leader no longer is around to lead, whether it is by choice or unexpected circumstances. To embark on succession planning with an established process offers clarity, comfort and confidence.
MO: Can you provide some guidelines for ways that our readers could strategically integrate their business, estate and charitable planning objectives?
Brad: First and foremost, business owners need to define their personal objectives. Once established, these objectives will direct the activity regarding business, estate and charitable steps. It is important for the owner to conduct a “stress test” that will match their objectives against three critical areas: creditors, taxes and flexibility.
When planning business, estate and charitable activity, I help business owners to ensure they have necessary protection (from creditors). I suggest tactics that keep businesses from paying unnecessary taxes. And, finally, I try to allow for the most flexibility with any plan to prevent a business owner from taking any irrevocable steps they may regret at a later date when circumstances change.
MO: What are some tips you could offer when it comes to smartly and efficiently transitioning a family business from the current generation to the next? What are the most common pitfalls and how can they be avoided?
Brad: First, the family business owner needs to determine his/her own needs before trying to build a succession plan. Second, the owner and next generation family members need to be honest. There are many hard questions that arise during the transition planning process, such as which family member is able to take over the business versus who feels entitled to take it over, regardless of skill and ability. Feelings may get hurt, but it is better to sort these issues out early in the process. Respect is key.
Another pitfall that I have observed is not following a defined process. I have seen first-hand how a step-by-step guide can navigate a family through the difficult questions related to both family dynamics and business objectives.
Finally, a common pitfall is waiting too long to develop a plan. It is never too early to begin planning for the next generation!
MO: What’s the biggest risk that you’ve ever taken and how did it turn out?
Brad: After college, I worked for several years as a CPA in a well-known, established, international accounting firm. It was a good job with a good firm…I was on track for respectable career progression. But something was missing. The entrepreneurial fire burned, I suppose, and I felt that legal education may round out my tool box of knowledge and skills and add value to what I could offer business owners – and myself. So, I left accounting and went to law school. And I have to say, I am glad I did!
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