The Bottom Line - Banking on Succession Planning
Banking On Succession Planning
The softer side of succession planning: Advice and insights from the field
Sometimes, knowing where to begin regarding succession planning is challenging since it’s often as much about relationships and communications as finances and business strategy.
Whether you’re preparing to sell your company or pass it to a new generation, the process is one of the most pivotal—and personal—moments in a business owner’s life. From trust and competence to passion and legacy, business succession is more than just signing on the dotted line.
Over the years, we’ve helped numerous multi-generational businesses, many family-owned, navigate transitions like these. As business owners ourselves, we’ve also faced these challenges personally. Here’s what we’ve learned along the way—and what you may want to consider when planning the next chapter of your business.
Trust, competence, and passion: the fundamentals of any business transition
A successful transition should begin with a shared trust. Owners must trust that successors have the temperament and skillsets to navigate the ups and downs of business ownership. Do successors and their teams have the financial, managerial, and emotional acumen to run the business?
For successors, that also means trusting the decisions, vision, and stability of those who came before them. Is the business sound, and can the buyout plan be supported with current and future revenues? Can scalability be achieved?
Passion is also critical. Owner passion should be matched with successor enthusiasm and interest. A successor should feel pride in the business they’re stepping into and a deep desire to improve it without losing what made it special. It’s about striking the delicate balance of preservation and evolution.
This is also where good predecessor and successor communications are most important. What are the internal and external strengths, weaknesses, opportunities, and threats? Realistically assessing upside growth and downside risk should be thoroughly explored and anticipated. What are the owner’s most critical contributions, and how can those be substituted or replaced? Where might the business struggle during the handoff?
The best owners and successors surround themselves with trusted advisors and partners who can deliver sound advice. Whether it’s legal guidance, financial expertise, or operational support, having the right people in your corner can make all the difference.
And, of course, no succession plan is perfect. There will be ups and downs, and that’s normal. What matters is a shared commitment to the business’s long-term success.
At Country Club Bank, we understand these dynamics firsthand. As a family-owned, multi-generational business, we’ve lived through succession planning experiences. Because we’ve walked that path ourselves, we can help others navigate it, too.
Whether stepping aside or stepping into a new role, succession planning is your chance to secure your financial future and your company’s long-term success. Trust the process, lean into your strengths, and never lose sight of what made the business—and its people—great in the first place.
Let us know if we can help. Our team has the experience and insights to help you plan and finance your legacy and future.
— Collin Thompson, Vice President Corporate Banking, Country Club Bank, Member FDIC
Economic Insights
Past performance and new predictions for housing, interest rates, jobs, and inflation
In this first month of 2025, we examined how the Kansas City area and the surrounding Midwest compare to national averages across key indicators such as housing, interest rates, inflation, and employment.
A strong U.S. dollar, healthy corporate earnings, lower inflation, and a new administration add to a reasonably positive outlook for 2025. But let’s take a closer look at where we’ve been and where we’re likely to be going over the next year.
Housing and interest rates
In 2024, the U.S. housing market saw home prices rise by 6.03% year over year, reaching a median price of $404,400 (according to the National Association of Realtors). In Missouri, the median price hit $271,200. According to real estate firm Redfin, home sales increased by 11.4%, and the inventory of homes for sale grew by 12%.
The total value of U.S. homes reached a historic $49.6 trillion, gaining $3.1 trillion over the year. While market activity surged, high housing payments and affordability challenges still tempered sales growth, with many potential buyers turning to renting instead.
Looking ahead, the National Association of Realtors has identified Kansas City as one of the top 10 housing market hot spots for 2025. Factors contributing to this outlook include stabilizing mortgage rates around 6%, increased housing inventory, and continued job and income growth, which are expected to boost buyer activity.
The association forecasts nationwide home prices will rise slower, reaching a median existing-home price of $410,700. Kansas City's affordability and growth potential will make it a focal point for prospective buyers and investors in the coming year.
In 2024, the Federal Reserve also cut interest rates several times, lowering the federal funds rate from a peak of 5.25%-5.50% to a range of 4.25%-4.50%. In 2025, the Fed projects a more cautious approach, with plans to reduce rates by approximately 50 basis points, subject to change based on economic data.
Employment
In 2024, the U.S. labor market remained robust. The unemployment rate remained steady at 4.1% in December, a slight decrease from 4.2% in November. The rate fluctuated between 3.7% and 4.2% throughout the year, reflecting a slightly softer employment environment. Comparatively, the Kansas City area unemployment rate is currently at 3.3%.
In December, the national economy added 256,000 nonfarm payroll jobs, with significant gains in health care, government, and social assistance sectors. Over the year, total nonfarm payroll employment increased by approximately 2.2 million, averaging a monthly gain of 186,000 jobs.
Projections indicate that the national unemployment rate will remain relatively stable in 2025, with fluctuations expected between 4.1% and 4.3%. This outlook suggests a continuation of the current labor market strength, supported by moderate economic growth and job creation.
Inflation
In 2024, U.S. inflation moderated overall. The CPI rose 2.9% in December, and core inflation was 3.2%. Energy prices decreased, while food prices increased.
As of December 2024, the Midwest's CPI increased by 0.2% from the previous month. Over the 12 months ending in December 2024, the Midwest experienced an inflation rate of 3.0%.
Nationwide, inflation is predicted to remain slightly above the Federal Reserve's 2% target in 2025 (the FED is estimating 2.5%) due to potential new tariffs and price pressures in services and housing.
Bottom Line: Kansas City and the Midwest region are generally aligned with nationwide trends in housing, interest rates, jobs, and inflation. While housing affordability and employment growth are positive aspects, ongoing concerns about inflation, Fed rate cuts, and new economic trade and spending policies from Washington, D.C., will warrant a cautiously optimistic economic outlook in 2025 for our region and the country.
— Marcus Scott, CFA, CFP®, Chief Investment Officer (CIO) for Country Club Trust Company
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.
The opinions and views expressed herein are those of the author and do not necessarily reflect those of Country Club Trust Company, a division of Country Club Bank, or any affiliate thereof. Information provided is for illustrative and discussion purposes only; should not be considered a recommendation; and is subject to change. Some information provided above may be obtained from outside sources believed to be reliable, but no representation is made as to its accuracy or completeness. Please note that investments involve risk, and that past performance does not guarantee future results.
Win-Win Client Success Story
New owner at Industrial Lumber brings a commitment to quality, culture, and new growth
When Justin Jenkins bought Industrial Lumber Company in March 2024, he knew he was taking on more than just a business. He was stepping into an 80-year legacy of ingenuity, resilience, and teamwork that has served customers all over the Midwest with the highest quality custom crates, pallets, skids, and industrial-grade lumber products.
“The company has a long history, strong culture, and great team,” Jenkins said. “I want to preserve that while putting my touch on it, and I wouldn’t be here if I didn’t think we could do great things.”
After a decade of business management experience and two years looking for the right opportunity, he found Industrial Lumber and knew it was the right fit.
Jenkins also knew that Country Club Bank was the right fit to finance the purchase. Ryan Banes and the team at Country Club Bank worked with Jenkins to vet the business valuation, assess income statements, and design financing. In addition to the primary loan, Jenkins also opened new Country Club Bank operating accounts and a line of credit.
“Ryan and the team at Country Club Bank made the process straightforward and set us up for success from the beginning,” Jenkins said. “They structured the deal in a way that gave us some breathing room and ensured we had the financial resources we needed from day one.”
Industrial Lumber helps businesses safely transport their goods across the country or overseas. The company also distributes heat-treated, export-compliant lumber that meets international shipping standards.
Jenkins said one of the big appeals at Industrial Lumber is that the work often involves complex projects. Recently, his team built a custom crate for a 100,000-pound piece of equipment headed to Central America.
“Seeing the team safely package such a massive piece of machinery was impressive,” Jenkins said. “It shows the level of skill and care our teams bring to the job.”
With financing and a credit line from Country Club Bank to support cash flow, Jenkins has been able to focus on running the business and making new plans for growth.
His priority is to grow Industrial Lumber while maintaining its strong culture and reputation. He plans to expand the company’s presence in the Kansas City market and eventually into other parts of the Midwest.
Part of that growth involves educating customers about the full range of Industrial Lumber services.
“There’s a lot of potential for growth in this region, and we’re taking it step by step,” Jenkins said. “We’re meeting with existing and new potential customers every week, sharing our full scope of capabilities and making sure they understand how we can help. It’s a constant process and one we enjoy.”
Justin credits his success to more than just a good business model. The support of his wife, Nicole, and their three children made the risk of starting something new more manageable.
“Taking this leap was stressful, but having Nicole’s backing, along with the rest of my family, gave me the confidence to move forward,” Jenkins said.
The support from Country Club Bank also made an impact.
“Ryan and the team believed in me and the business,” said Jenkins. “Having that trust and partnership with Country Club Bank has made all the difference.”
Succession Planning Insights
How to think about the financial aspects of buying or selling a business
Buying or selling a business is complicated, and the financial details can be intimidating. Like most complex projects, breaking things down into smaller components can help.
Understanding these components can help you navigate the process more effectively and intelligently. As legendary investor Warren Buffet often says, “The biggest risk comes from not knowing what you’re doing.”
Below are 10 essential tips for educating yourself and knowing more about what you’re doing.
For buyers:
Assess the financial health of the business. Conduct a thorough review of its financial statements, including income statements, tax returns, and key performance indicators such as profit margins, customer retention, and debt levels.
Understand the valuation. Valuation methods such as discounted cash flow (DCF) analysis, asset-based valuation, or market comparisons ensure the asking price aligns with the business's value. Consult an independent financial advisor or appraiser to confirm the valuation.
Investigate liabilities. Check outstanding debts, liens, or lawsuits to uncover hidden risks. Review employee benefits, retirement plans, and long-term leases or supplier contracts that could affect profitability.
Plan for financing. Determine how you will finance the purchase through personal savings, bank loans, or investor funding. Be sure to factor in legal fees, due diligence, and working capital costs.
Evaluate growth potential. Assess the business’s potential for growth by analyzing market trends and competition, scalability of current operations, and opportunities for expanding products, services, or geographic reach.
For sellers:
Get a professional valuation. Maximize your sale price by having a professional determine your business's value. This ensures a competitive asking price that reflects revenue and profits, tangible assets such as equipment and inventory, and intangible assets like brand reputation, patents, or customer loyalty.
Organize your financials. Provide clear and accurate financial records to prospective buyers. Clean up your books by resolving inconsistencies or errors. Highlight consistent revenue growth or cost-saving measures. Prepare a detailed list of assets and liabilities.
Consider the tax implications. Work with a tax advisor to minimize your tax burden. Understand capital gains taxes on the sale. Evaluate the benefits of structuring the deal as an asset rather than a stock sale. Plan for tax-efficient ways to reinvest proceeds.
Prepare for due diligence. To make the process smoother, create online, secure folders with key documents such as licenses, contracts, and permits. Be candid about any business challenges or risks and promptly address buyer concerns to foster trust and transparency.
Identify your exit plan. Decide whether you want to stay involved in the business during or after the transition. Plan how you’ll invest your time and money going forward. Think about how you’ll remain active and engaged in your professional and personal projects.
Buying or selling a business is a complex process, but preparation and financial foresight can set you up for success. Buyers should focus on understanding the business's value and growth potential, while sellers should prioritize clean financial records and transparent due diligence. Ultimately, it’s about finding a match that benefits both sides and builds a foundation for future success.
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