• Johnstone Supply Co.: Prepares the Company and Its Partners for the Future

    March 1, 2008
    Editor's Note: When we first started thinking about a special issue on succession planning, I heard through the grapevine that Portland, OR-based Johnstone

    Editor's Note: When we first started thinking about a special issue on succession planning, I heard through the grapevine that Portland, OR-based Johnstone Supply Co. had taken a very active interest in the subject. They had. I had a long chat with Jim Adcox, the company's very bright and personable senior vice president for membership, who was a fount of information (and great stories).

    He actually took the time to offer me an abridged version of the Johnstone program, and with his kind permission, I've reproduced those observations.

    Jim was further helpful by introducing me to Mark Green, Ph.D., a succession planning expert. He is assisting Johnstone in their quest to offer a reliable and effective succession planning program. In an introductory e-mail, Mark also sent along forms that he designed and Johnstone's owners use for self-assessment.

    Mark, who comes from a family-owned business background, was gracious enough to allow us to reproduce two of the important documents.

    For a more thorough look at Mark's helpful documents and more information, contact him at 503/510-0591 or [email protected] (also see the Resource Directory on page 36).

    The Johnstone Supply Co. Approach to Succession Planning
    1. Offered several speakers to talk with Johnstone owners at the annual and midyear meetings.
    2. Followed up with a member survey.
    3. Compiled the survey results with the help of Mark Green.
    4. Reported the findings to the board.
    5. Created several regional schools for our owners that included three days of classes, with three one-hour one-on-ones with each family every day with Mark Green and company.
    6. Designed commitment letters that Johnstone created together with action items for each individual family.
    7. Initiate follow-ups for each family when the deadlines are coming due by Family Business Group.
    8. Offer more success planning schools scheduled as well as a second round of advanced sessions for the families who have completed the first one.
    9. Preparing to implement a goal for all our owners to be “succession-certified.”
    10. Acknowledge that this is an ongoing process.
    • Are your important papers and documents well organized and well labeled?
    • Are your important papers and documents stored in a fireproof place, and does your family have access to the location?
    • Do you talk openly with your family about your personal and financial issues?
    • Have you prepared and entrusted someone to handle your affairs in case you can't?
    • If you were incapacitated, would anyone have legal power to make decisions for you? This would require a legal power of attorney. Do you have one?
    • Do you have a recurring and sufficient source of cash income which will last throughout your lifetime?
    • Do you have a living will that provides specific directives to physicians?
    • Do you have a personal physician, whose number you carry with you at all times?
    • Do you have an annual physical and follow doctor's orders to the best of your ability?
    • Do you have a sufficient health coverage that will remain in force throughout your lifetime, so that medical costs would not strip you financially?
    • Can you talk about death openly with your loved ones?
    • Do you have a formal, legal document, such as a will or living trust, that specifies your wishes regarding disposition of your estate?
    • If your answer to the previous question was YES, have you explained its basic terms to your family?
    • Do you have a listing of your personal holdings and an estimate of the value of your estate?
    • Do you have an estimate of the amount of estate taxes which would be owed at your death or at that of your spouse?
    • Do you have trusted advisers to whom you can turn in a crisis and with whom you have discussed your situation within the last year?
    • Do you have a banker who could help manage your financial affairs?
    • Is your credit good enough so that you could obtain money quickly, if needed?
    • Do you have sufficient life insurance to cover costs, including estate taxes, at your death?
    • Have you taught your children sound money-management techniques, so that they are good at handling financial affairs?
    • If a catastrophe happened right now, could you describe yourself as being satisfied with your life?
    • Can you function independently, and take care of yourself and your children?
    • Do you have easy access to a phone from anywhere in your house?
    • Do you have someone who phones you regularly, especially if you live alone?
    • Do family members know your hospitalization, death and burial wishes?
    • If you have young children, have you legally designated a guardian should something happen to you and your spouse?
    • If you were to become seriously ill or incapacitated, would someone quickly volunteer to care for you and any young children still at home?
    • Do you tell your family how much you love them?
    • Does your family have a documented history of your life, which includes a family tree of your side of the family?
    • Does your family know what you consider to be the most important achievement of your life?
    • Have you received all the appreciation which you feel you deserve?
    • Have you given all the appreciation which you feel others deserve from you?
    • If you have special things which you want to leave to special people, have you prepared a legal document specifying who gets what at your death?
    • Would your family know what your favorite memento is, and how and where to preserve it?
    • If you have any lifetime dreams which still are possible, does your family know what they are?
    • Are you part of a close circle of friends or family who would rally together in times of crisis?
    • If there is a family tradition or ritual which you want to continue throughout your life, does your family know how important it is to you?
    • Are any personal assets pledged against loans?
    • Does the accountant have personal financial statements for us?
    • If so, for what time period?
    • Where are our most recent tax returns filed?
    • What types of estate planning mechanisms are in force (gifting, trusts, etc.)?
    • With your current legal arrangements (will or living trust), when would estate taxes be due?
    • Approximately how much would they be?
    • What funding plans are in place?
    • Do you have a will or a living trust?
      • If so, where is it kept?
      • When was it last updated?
      • What are the essential terms of the documents?
      • What family disharmony might occur over the terms of asset distribution?
      • Who, if anyone, holds power of attorney for you?
      • Under what circumstances?
    • Where do you have safe deposit boxes?
    • Where are the keys?
    • Does your spouse have access to the boxes now? After your death?
    • Will your surviving spouse/family have access to cash at the bank?
    • What sources of cash flow will be available for living expenses for the surviving family?
    • Will these funds be adequate?
    • Are there monies in trust for the surviving spouse or children?
    • Will family members have trustee responsibilities? If so, who?
    • Do you have mortgage insurance? If so, with whom?
    • Car loan insurance? If so, with whom?
    • Do you have disability insurance? How much cash inflow would it provide? For how long?
    • Do you have special accident insurance, such as travel insurance? If so, with whom?
    • Do you have any type of credit card insurance? If so, with whom?
    • Who in the family is covered by your health insurance policy?
    • How long would that coverage continue if something happened to the insured?