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Business Succession Planning - A Conversation with Ravi
135 Plays2 years ago
" There is no Success without Succession"
Chartered Accountant and Entrepreneur , Ravi Mamodiya joins me in this episode to talk about Business Sucession Planning . Business succession is often underrated and ignored by many business leaders . In this conversation, Ravi shares his rich experiences backed by over 10years experience in accounting, SME business growth and advisory, process designing, and finance structuring, taxation, and law.
Ravi highlights how he has helped companies of varying sizes to tackle challenges and prepare for their future using his step-by-step approach and awareness of business succession planning.
Enjoy this conversation and don't forget to like and subscribe to #theentrepreneurspeakspodcast.
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Transcript
Importance of Succession Planning
00:00:00
Speaker
and so do apply with the succession also if you wanted to plan it is a good time to plan for the succession there is one more study that shows that if you want to plan for your succession then at least plan at least 10 years before so that you can properly transform your leadership from one generation to another in a very smooth way and it takes at least 10 years to set up so that the next leader can take up the things in a right way and take to the another height of the build
00:00:27
Speaker
Welcome friends to The Entrepreneur Speaks.
Introduction to 'The Entrepreneur Speaks'
00:00:30
Speaker
I'm your host Kofi Anumaidu. Each week I host an amazing entrepreneur on their journey, successes and challenges. It is my hope that we'll learn from their experiences as we all work towards living a life of passion and purpose.
Meet Razi Mamoudiya
00:00:49
Speaker
My guest describes himself as a student of life who wants to live a life in a very holistic way.
00:00:59
Speaker
He's a chartered accountant by profession and the founder of Master Insider LLP. His critical expertise is in SME business growth, process designing, and finance structuring. My guest is Razi Mamoudiya. Sit back, relax, and enjoy our conversation.
Razi's Early Life and Career Influences
00:01:26
Speaker
welcome to my show Ravi thank you so much coffee for inviting me and having me on this conversation where we can talk about this topic and wonderfully describing my intro thank you so much thank you all right so let's get to know you some more can you tell us a bit more about yourself and your childhood yeah so coffee I'm basically belongs to an India place in Rajasthan a typical place where there is a lot of deserts all around and
00:01:55
Speaker
There's a lot of Marwadi businesses going around. A typical MSME background where the people are more into a business rather than in a service. Marwadis are very famous for their business tactics. In India, especially a Marwadi is a breed which deals with the merchandising and doing the things in a better fight from hundreds and thousands of years.
00:02:19
Speaker
So I born and bought up here and I did my studies in Jaipur, Rajasthan, India and post that I did my qualification and post qualification courses from here and right from the childhood I have seen that the importance of a family and family-run business and how they can influence the things near around.
00:02:41
Speaker
So that is what my began began the things and then gradually there's a many things has happened along with my graduation. I have seen that how a business can transform from a one generation to another and how it can grow up to the another level and I've seen the same into my family also I belongs to a very middle class family.
00:03:03
Speaker
Humble background doing a merchandising of a grains in a village and from there I've grown up and taken my step up and came out from the village and set up into a city and doing my own.
00:03:18
Speaker
So yeah, that is about something my studies and background.
Path to Becoming a Chartered Accountant
00:03:22
Speaker
Okay, so thank you so much. So reading about you and as I mentioned in my intro, you are a chatted accountant. Can you tell us a bit more about your your your career in accounting? Right. So being from a Marwadi family, I understand the commerce right from the beginning, the importance of money, the importance of numbers that how the number grows up and how the things has happened into a way.
00:03:46
Speaker
how the costing should be calculated and everything has been taught from right from the childhood. So I'm totally inclined towards the commerce and wanted to grow my graduation from the commerce background and post along with my graduation I indulge for the course of chartered accountancy. So it's one of the toughest course in India and
00:04:06
Speaker
I have passed my exam and during that exam I just really realized in my training it's about three years training that practically we have to do along with the qualification of the papers so that training really make me to understand that how
00:04:23
Speaker
how a practice, how a commerce students plays a role into a business life and how much it is important for any MSME and how it is really needed for every MSME to understand all of these kinds of things and numbers are the most. So I did my chartered accountancy from Jaipur and then started my career post that post my qualification career.
00:04:49
Speaker
while working with to a big MNC like Vidanta and Hindustan Singh and ENY and post that I have started my practice, my own MSME helping practice. So basically what happened that I have seen into
00:05:04
Speaker
my career that a big corporate set up their things into a very nice way they have other process in place they have a systems in place but they don't know how to actually but the MSME people with whom I was working they really don't know how to reach there and there's a huge gap between these two things so I felt like that to help them
00:05:25
Speaker
To help them, I started linking that how a corporate structure works and how actually the MSMEs are working and how they can make up proper processes around it and can grow
Bridging the Gap for MSMEs
00:05:36
Speaker
up. So I'm a kind of person. In my chartered accountancy, the taxation and auditing was one of the most important critical role that we play.
00:05:45
Speaker
But along with that, I feel that the value addition to a system is the most important thing. So I always advise my client along with that, that how they can grow up and how they can be a high can, how can I become their value added person for their businesses. And that really helped me to grow up into a nice way and understand that how our commerce things grows up. So one which I wanted to mention here is that I find a gap between
00:06:10
Speaker
what the corporate is doing and the SMEs are doing and I understood the importance of providing a value-added service and these two things really helped me to grow up and to see the scenario in a very different way. Okay so we'll talk a lot more about what you are currently doing later on in our conversation but you've you are the founder of master inside this LLP. Can you tell us a big
00:06:37
Speaker
more about master inside this LLP right so this is a company which I have incorporated in 2018 so before taking you there let me quickly take you to my life's journey that what happened at post my graduation and everything that I have set up to my practice and doing things well and in 2011 I have set up my practice and everything was going pretty well
00:07:01
Speaker
and suddenly in 2016 my partnership doesn't work out so I have to break out with my partners and so they are my firm partners who are helping me and we are doing a taxation and auditing practice together and then suddenly a mismatch happened between us and in 2016 we couldn't work out on the same time I lost my father in the same year in 2016 my partnership was booked in April and in June 2016
00:07:30
Speaker
I lost my father in an accident.
00:07:33
Speaker
he was not having that age and he got suddenly expired by an accident in our trip when he was into my brother into a religious trip and that really shocks me up and that really make me understand that life is completely uncertain and things was going not pretty good and then in 2000 while working and doing all of these helping with the people and understanding and holding my family and finances and everything there I
00:08:03
Speaker
I understand that the importance of value added service is very high so I made this company and registered this company by the name of Master Insiders LLP where we are providing a growth and a strategical consulting to the people who really need it especially in the MSME domain that how MSME can grow up and become a big corporate and how the trajectories lives look like.
Master Insiders LLP - Strategic Consulting
00:08:24
Speaker
So in 2016 and 2018, this has happened. And in 2019, 2020, we all has faced a COVID. And that was a scenario where I understand that without a value addition, no business can survive. And how can be a big contributor for those kinds of things. So that is what my business do. And that is what along with my practice with my taxation auditing work, this domain of Master Insiders works with. Okay.
00:08:52
Speaker
All right, so how long have you really been running this particular business and how has the journey really been? So it's about 10 years that I'm into this domain. I've completed my decade last year and I've seen that so many ups and downs and things, but I really feel that the commerce and this background is going to really go up and people are looking forward to the commerce graduate and people so that they can be helping them into their businesses and numbers and finances.
00:09:21
Speaker
So I feel that this is really nice to go on. Running a business is not a work in a pack. It has its challenges, difficulties, and also comes with you gathering a lot of lessons. So I would like us to spend some time
00:09:42
Speaker
to talk about the challenges you've encountered on this journey, as well as the useful lessons you've picked up.
00:10:02
Speaker
And while working on one of these side, when I lost my father in 2016 and till 2018, I really feel a very backside of a life where I feel that being an elder into my family, on the one hand, I have to take care of my family, emotions part and whatever they want in their life and providing them and assisting them and helping them, my mother, brother, sister, getting married of a brother, sister.
00:10:28
Speaker
that was a very tough time and along with that that was somewhere how a peak time for my practice for my for my chartered accountancy work also. So somewhere somehow I balanced it and I really find that if somebody passes away into a family one is a financial aspect that you have to control and other one is a professional aspects and a personal aspects that we have to take care of. So I really find a gap when
00:10:55
Speaker
when I was working in my professional domain and I really find there's a huge gap where I have to mitigate for the emotional part of my family by helping them and to a personal part as well and the financial aspects of my family.
Personal Impact of Father's Passing
00:11:13
Speaker
So all of these learnings give me a big lesson and then a COVID has happened
00:11:19
Speaker
And COVID really makes me realize the uncertainties of life. So in this domain in 2019-20, I wrote a book, which has been published in 2022, by the name of Business Succession Planning. In this book, I have tried to mention my intricacies, my problems, my challenges, and tried to give a solution to our people that how they can deal with it.
00:11:45
Speaker
So I have seen at Kofu that people don't really understand that life is uncertain and death is something which is inevitable to all. That is going to come to us.
00:12:00
Speaker
that uncertainty at the time of COVID really make me understand that if I understood something into my life that how much important it is to transform a business from one generation to another so I must fast on to my another generation by writing a book and typically saying my charted accountancy career this was the biggest thing which I did and that was the biggest challenge as well because all of those putting point making a structure giving a approach to it that how it can be happened
00:12:28
Speaker
So when my father has passed away so I have seen that I wanted to take a reference of some books or something that I can read and understand.
Writing 'Business Succession Planning'
00:12:37
Speaker
But somewhere somehow I haven't find any book. There is no structured way to deal with it. And I really find that he just wanted to provide a solution regarding it. And
00:12:48
Speaker
there how this beautiful book has came up and that become a big contributor from my side to the society so that is my biggest thing that can happen with me in my charted accountancy career. Okay all right you just mentioned the book we'll spend some time to talk about the book into details. So you've been on this journey there's been challenges
00:13:09
Speaker
But I believe there's also been a lot of wins as well as lessons. Can you share some lessons you've picked up so far on this journey with us? Right. So while working with many entrepreneurs, I realized that the basic mindset and the basic way how the owners are working or the business owners are working at somewhere somehow is very limiting to them.
00:13:34
Speaker
So I'll tell you a very refined examples and by that examples I keep on explaining to the people also so I just put forward it to you as well. So in the Hindu religion there is one that called as a Hindu mythology talks about a Vishnu Bhagawan that is a God Lord Vishnu.
00:13:53
Speaker
And with this mythology that explain about a very good thing that Lord Vishnu is having two vehicle to travel. That is two animals on which Lord Vishnu used to travel and see that well-being of the complete world. That complete world means the whole universe.
00:14:12
Speaker
So what happened that Lord Vishnu having two vehicle one is Serp is a snake, snake means a reptile on which he is lying up and he sleeps and he used to travel on that snake and the second one is Garud, Garud is a bird, an eagle on which he used to sit and see that all the things are going well or not and by these two vehicles he used to travel to the universe and talks about the well-being that is how the mythology talks about
00:14:42
Speaker
But I think by this example, Lord Vishnu or this mythology wanted to say that, that every person to see anything have two view. One is small view, that is a reptile view, that is a snake view. And second is bird eye view. That is a longer prospective view, that is to see beyond, that is to see somewhere outside, somewhere beyond the things.
00:15:08
Speaker
And so do I feel with every business entrepreneur. So in this my journey, I realized that every people have these two kind of views. One is Serp view and another one is Garud view. Serp view is a very limited view. So our business owner is very limited himself by dealing into a day to day operations and stuck up there and not looking and not seeing that how we can provide a better value additions to the system. And second view is Garud view. Garud view means
00:15:37
Speaker
a bird eye view, where those entrepreneurs who think beyond, who wanted to think their business generationally, who wanted to see and make the processes around, who want to have a proper business plan in their hands, who wanted to have a proper vision and mission and goal in their hands and their passion and purpose rise them. That is what I call a Garudvi.
00:15:58
Speaker
So if you ask me what is my biggest lesson while working with different entrepreneurs, I realize Kofu that people or maximum entrepreneurs use the SERP review, not the guru review.
00:16:11
Speaker
and that is what the maximum limiting factor for all the MSN's. So those who are listening as I just wanted to mention to them that please stop taking a SERP view and take a Garud view into your business. That is how you can transform, that is how you can develop, that is how you can become one day a big corporate and that is how the journey of corporates and things begins.
Understanding Succession Planning
00:16:36
Speaker
okay um so you talk a lot about succession planning and its importance so i would like us to spend some time first of all appreciating what succession planning is and why it is so important so what is succession planning right why is it so important thank you so much for asking this valid question kofu so what is succession planning succession planning is nothing but
00:17:02
Speaker
just the transformation of your leadership from one generation to another if you will transform your leadership from one generation to another and if that can help in a proper way that might be possible that happens within the family that might be possible that go outside the family
00:17:19
Speaker
whatever the way when any leadership got transformed that is known as succession planning. So majorly it goes into two ways one within the family if it goes within the family then it is known as family succession planning it goes outside the family then it is known as business succession planning. And this is really very important for every business entrepreneur to have a bird eye view and to see that how he can plan how she can plan for their succession.
00:17:48
Speaker
how their business can help and can run beyond one generation. If that can go beyond that can definitely help you. I'll give you some certain facts and data. So I have seen in worldwide while working into this book and understanding the different ideologies of the people on this. I realized Kofu that less than 5% of people are able to transfer their business for more than three generations.
00:18:16
Speaker
otherwise before they collapse it and that is one of the important reason why MSMEs are not getting in progress and there is very very interesting study of Boston Consulting Group. VCG has given such a refined study which says that if people plan for their succession and if people don't plan their succession then what is the impact on the business.
00:18:40
Speaker
and that study shows that best in consulting company study shows that if people plan for their succession then they can increase their market capitalization by 28% and increase their EBITDA which is a profit by 4.5% at least.
00:18:59
Speaker
That means the market respond very nicely when you plan for your succession. By planning a succession of family values can be impacted. By planning a succession, our key employees can be retained into a business. By planning a succession, a long term vision on which the family is working can be planned. The succession is such an important factor. So just to brief you of what I wanted to say that there is a high importance of succession and succession is not just that
00:19:29
Speaker
That technical word, succession is just transforming your business leadership from one generation to another. OK. So you've talked about what succession planning is, why it is important for every business to effectively embrace it and embed it in its operations. So can you help us with how businesses can effectively plan for succession?
00:19:58
Speaker
and then some guidance and tips you can offer. How can businesses effectively plan for success? Right, right. Thank you so much for taking up the discussion up and taking to another level. So very nicely said, Kofu. So before planning for it, that how we can do it, the question arises when it is to be done. So you asked me what is succession. I've told you what is succession by succession. And then the question arises when to plan for a succession.
00:20:28
Speaker
So always use that Chinese prove that the best time to grow the plant is 20 years ago and the second best time is today.
00:20:37
Speaker
and so do apply with the succession also. If you wanted to plan, it is a good time to plan for the succession. There is one more study that shows that if you want to plan for your succession, then at least plan at least 10 years before so that you can properly transform your leadership from one generation to another in a very smooth way. And it takes at least 10 years to set up so that the next leader can take up the things in a right way and take to the another height of the business.
00:21:03
Speaker
So for example, if I wanted to retire in the age of 65, then I must started planning my succession when I was in the age of 55 around.
00:21:14
Speaker
If that can happen, thank you for asking this question. That's really a valid question that after understanding that what is succession and why to plan for a succession. Now, it's really important to have a conversation that how we can do it. But before that, I just wanted to take one more point here that when to plan for it is always a question from many entrepreneurs that what is the right place to plan for the succession? When should I plan? So I always say a Chinese program that
00:21:43
Speaker
the best time to grow the plant is 20 years ago and the second best time is today so do for applies for planning of your succession as well to plan for your succession we have to understand that that
00:21:57
Speaker
We give at least a good ample amount of time so that we can have our right kind of a transition of your leadership from one generation to another. And after studying to many consultant and understanding a successful transitions, I realized at least it takes 20, it takes at least 10 years to transform your generational business from one generation to another.
00:22:24
Speaker
There are so many intricacies are involved into it that at least it takes 10 years to transform. So I'll give you a very nice example that if I wanted to retire the age of 65 then my best time to plan for my succession is when I'm in the age of 55. Near around 55 I'll plan for my succession that will be the right time and the best time to plan for it. So now how to plan for it?
00:22:48
Speaker
After understanding our integrities of it and understanding that how people are reacting and how the successful transition has happened. The five step approach is what I always talk and which I've explained into my book as well. So to understand that we have to understand the five step approach that a succession how a succession can be planned. The first step is owner's vision. Second step is
00:23:19
Speaker
what is the business and family structure is. Third step is seeing that how we can plan a proper integration between these two things.
00:23:31
Speaker
Four step is identifying the successor and grooming him up. And last step is planning for the estate. When all of these things will happen, the automatically exit will happen into our business. So to plan for a succession, this five step approach is how we can plan for it. One, again, I'm repeating. One, owners vision identification. Second,
00:23:56
Speaker
how the business and family structure look like third creating a proper alignment between your family and business fourth identification of groomer identification of successor and groom her or him up and last step is planning for your estates that estate planning comes in the picture and if you all do this then exit will happen before I take this conversation ahead I just wanted to take your kind attention to a one more thing you know kofu that there's a
00:24:25
Speaker
When the child born, a very small child, just after born in 3 months, 4 months, when we play with the child while playing with our fingers and while having his or her activity, the small child hold her head, hold her fingers and he hold her fingers so tightly by his thumb, by his complete energy that we have to push ourselves, we have to push our fingers to leave so that he or she can leave us.
Five-Step Succession Planning Approach
00:24:55
Speaker
We usually think that wow, that kid really loves us so much that he really wanted to get attached and don't want it to leave us. But scientific reality is that a kid first learned how to hold the things and then he learned how to leave the things. Do you understand that what I'm saying? That means that first a kid learned psychologically and emotionally how to hold and then after a few months he is able to understand how to leave.
00:25:25
Speaker
that also applies to our business owners. Many a time I feel that business owners spend their complete life just to understand that how they can have a proper holding into their business. But all they miss is to learn that how they can leave their business. So this five step approach can really help them to go step by step to which they can reach there and they can plan their success into a right.
00:25:49
Speaker
Okay. All right. So thank you so much. In your submission, you've mentioned your book, your book, and cited examples from your book. So I want us to spend some time talking about your book. So what is the title of the book? What will one find in the book? And what really motivated you to write this book? So the title of the book is Business Succession Planning. Business Succession Planning.
00:26:17
Speaker
And what would one find in the book? And what really motivated you to write this book? Right, so that's really nice that what motivated me to write the book. So the title of my book is The Business Succession Planning. That is available on the Amazon Flipkart in every place wherever you wanted to go and check it online and the delivery can happen all over the world.
00:26:40
Speaker
So what really makes me to write about this book is that I've told you the incidence of my life where I've lost my father in an accident on a one evening very fine evening I have I have I have dropped my father into on a train and suddenly suddenly I think has happened that in the morning
00:26:59
Speaker
I'll got a new that he's no more and to take care of my complete family and things it took me almost two years to get in and understand even post my graduation and being a Chartered Accountancy student and a former background student I it took me two years then I understood that so painful for those people who are not financially literate who don't understand how to read a law and how to interpret it
00:27:26
Speaker
If I got so much of trouble, how much they are having? And all of those things are popping into my mind everyday and night.
00:27:33
Speaker
And suddenly the COVID has happened, which again realizes the importance of life, which realizes of that how uncertain the life is. And that really made me to write about this book. It took me almost a year and so to write, to understand a different kind of a philosophy and through which I can go and write about this book. So I'm not a context writer. I'm not on a serial lighter that who can write a book consciously after one another.
00:28:01
Speaker
But that is my pain which I wanted to share and I find that book is the right way through which I can share it and help the people who are facing this kind of challenge. So just wanted to see that how the people can talk more about this topic. As I have already told you that people don't want to talk about death and uncertainty and life and death, something that is uncertain is going to happen. And so do the businesses that happen with a business owner. The business owner don't want to plan or talk about the succession.
00:28:30
Speaker
that really make me to write about this book okay so we are just about wrapping up and in our conversation um but before we go um what pieces of advice or steps
00:28:46
Speaker
um can can my listeners who are considering planning their session what can they really do um can you offer some pieces of advice on how they can effectively plan their session before we go right so i just want to advise to every listener that first first and foremost important thing take your consciousness there so every human life has a cycle person bonds
00:29:12
Speaker
Then it got a teenage, then it got a... about teenage. Then a life goes where he goes to a job, he got married. Then an old age comes and then a death happens. So do we have a business life cycle? First stage where we ideate. Second stage, a start-up stage where we incubate what we think. Third stage is a growth stage. Then holding up the growth stage.
00:29:40
Speaker
and last stage is the retirement stage. So I just wanted to put a concentration, a conscious being of every person who is listening us that please, I know that there are a lot of people who are talking about all the first four stages of the business, but nobody wanted to talk about this last stage of an exit. I just wanted to be there to say you that please plan for it. If you will plan for it, you can betterly do it.
00:30:04
Speaker
Your market will definitely respond in a right way. I've given an example and a study of Boston Consulting that how a structured transaction can help, how a planned transaction can help. So I wanted to advise every people to take your consciousness there and to plan for it on time so that you can betterly transform your business from your generation to the next. And talking about this, constantly thinking about it and writing.
00:30:33
Speaker
that what you are thinking, how you can do it, what are the ways to do it. And then following my five step approach is going to definitely help you. To quickly wrap you up that how we can definitely start writing, start doing it. So I'll say that first you do as this analysis that what is your as this situation? What is your family situation? What is your business structure? What all needed there?
00:30:59
Speaker
Then plan your business. Give a good business plan of 5 years, 10 years, 15 years, 20 years with every kind of a number and everything. Then plan your organization structure properly and see that how it looks like today and what you want and how it should be looking like in the future.
00:31:17
Speaker
After that, see that what is your family structure? Is there anybody from the family who can come and help us? If this all exercise will be done and if you will document it, you'll automatically come to know that now you can begin your five step approach. You have few things are ready and then you can definitely build up a right way to plan and exit from your business and plan for your success. I'll say not exit only.
00:31:43
Speaker
because sometimes people feel that exit means losing of a control. I just say that exit means exiting up from the operational activity and have a basic control on your business so that you can have a long term way to see that how a leadership can be come, the next leader can come and how he can grow up the business to the next level.
Ensuring Business Success Across Generations
00:32:04
Speaker
that is my advice to everybody who is listening us okay all right so before we wrap up we go of what will be your final words and message to my listeners I just wanted to say always that I used to say to everybody plan your succession one time because after succession after success a succession should come
00:32:27
Speaker
That is my final words that I wanted to say to everybody. Please keep in mind that after success, a success should come so that you can keep your business for more than a generation, for more than 100 years. OK, thank you so much. Thank you, Ravi, Mamoudiya, for sharing your journey and rich experience with us today on the Entrepreneur Speaks podcast.
00:32:50
Speaker
We wish you the very best. Thank you so much, Puffy, for having me and having such a wonderful questions and asking me all those points where I can help the audience and make them understand the importance of this. Thank you. Thank you. Thank you so much for having me. So this has been another exciting episode of The Entrepreneur Speaks podcast with my guest Ravi Mamoudia, an Indian Chatted Accountant.
00:33:13
Speaker
and the founder of Master Insiders LLP. I'll come your way next time with another interesting episode. I'm mainly your host Kofi Anni Medu. As always, do take good care of yourself and let's continue to keep hope alive. Cheers. Please be sure to subscribe to the Entrepreneur Speaks podcast on all your favorite podcast channels and if you have any questions or feedback, feel free to reach out to us on social media or in the comments section below.