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Last Update: Saturday December 16, 2017

Key Idea: Pass Ownership Formally

Mo wanted to officially make Cindy an owner. To do that, she changed her legal form of business from a sole proprietorship to a corporation. Cindy started buying stock in the company in 1975 through payroll deductions.   More...

Key Question:

A: 

In this case, Mo needed to put paperwork in place and lay out a plan for Cindy to buy the business.

Q: Is it really necessary to formally pass the ownership of the company from one generation to the next?

A:
For a number of reasons, yes. For most small business owners, the business is the single largest asset they own. When it comes time to "cash out," most sales to third parties include a lump sum up front and a payout from the earnings stream of the business over a period of years to complete the payment of the purchase price. Liquidating the investment in the business is frequently the most significant retirement income the small business owner has available. If the sale of the business is to family members, the retirement needs don’t disappear. They still have to be funded. The business, also benefits from an orderly and formal transition of ownership. During the transition, the experienced owner is still active and available for counsel and training. The new owner is able to learn the ropes of the business while becoming more and more vested in the business’ success.

Think about it

Have you adopted a formal legacy plan? Valuing the business and transitioning the ownership to the next generation are critical strategic activities that should be undertaken thoughtfully with the counsel of your attorney and CPA. Don’t wait until the last minute!

Clip from: Mos Chowder

Newport, Oregon: Cindy McEntee came to our attention because she was the state of Oregon's Small Business Person of the Year. Then, when we looked further, we found many more awards and citations. To be selected as the study for a show, a business must come up on everyone's list as being " ... loved by their community and respected within their industry."

In this episode of the show, we continue our walk down the Main Streets of America to see how one person with a vision has transformed the town where she was born and where she has chosen to stay. Life here is so rich with the intangibles that even her children have returned to this little seaport town and are helping to build the business and family legacy.

From a little joint on a narrow little street to the big White House on Pennsylvania Avenue, we discover how a fisherman's hangout becomes a national treasure.

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Mo's Chowder

Mo's Chowder, A family

622 SW Bay Blvd.
Newport, OR 97365
541-265-2979

Visit our web site: http://moschowder.com/

Office: 541-265-2979

Business Classification:
Restaurant

Year Founded: 1951

Pass Ownership Formally

HATTIE: Mo's annex opened in 1968 because the tiny original location couldn't accommodate the customer demand.

CINDY: We incorporated in 1975 and before that it was just a sole proprietorship. And, that's when I became indentured so to speak in '75 -- she had me buy stock out of my paychecks. And then she then carried all of the other stock. She was just feeding me a little bit here to see how I would do. Well, when you become a corporation – things change. And I was so happy to see that change because there it was a regular day that we paid bills and there was an accounting everyday for the money. We didn't wait until the end of the week to make the deposit. You made one everyday.

HATTIE: So it was like comforting to you --

CINDY: It was a more secure atmosphere – for sure.

Employee: I am going to retire at Mo's. I have a 401K. I have a modest 401K. Cindy has supported me and taken care of me. I have great job security. I feel like I am a good emissary for Mo's because I feel it from the heart, I serve from the heart. I am very successful at what I do. I am happy at what I do and I think it shows.

CINDY: We want them to want to be here. And not just, "This is just their job." It isn't just their job. They are all caretakers, just as I am, of a very popular business. And they become my ambassadors.

Employee: You've always got to say "Thank you" to your cook, even if it's a small thing.
 

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