Owning a contract cleaning business is much like having a child. You give birth to it, nurture it, watch it grow, and then there comes a time when you have to let it go.

Deciding when to retire can be as difficult as watching your children leave the nest. It’s particularly rough in an industry as involving as contract cleaning.

“It’s an emotional situation. It’s like selling your baby,” says Mitch Murch, the now-retired founder of Mitch Murch’s Maintenance Management Co., St. Louis.

So how do you prepare for the big day? Start now. Experts say the key to successful retirement is in planning well and doing it early.

Fear of the unknown
Too often, building service contractors avoid retirement planning like the plague. They think of it as one of those things they can put off until some later day.

“If a business owner feels that he can’t let go, he wants to stay in charge, then he’s typically not going to be gung-ho about the planning process,” says Wayne Messick, co-founder of Family Business Strategies, New York.

Handing over your baby — even when it’s to your own flesh and blood — is a scary proposition. BSCs usually have a lot riding on the success of the business and it’s not easy giving up control.

“A lot of people continue to reinvest in their company so you have a person who is 55 or 60 years old and they’ve tied up everything in the business,” says Messick. “So retirement then means turning over those assets in one way or another to the control of that next generation.”

Family businesses are blessed — and sometimes cursed — because of the dynamics of tight-knit relationships. When it comes time for retirement and succession planning, it’s not always a clear-cut choice of who will run the business next. That is another reason some BSCs put off their retirement longer than is necessary.

“Unless they are the only children of only children and they have an only child, then there are going to be people involved in the family who are not involved in the family business,” says Messick. “Then you have this whole complicated issue of how to treat everyone fairly, how to deal with the fact that one or two of them will run the place and the others won’t. If you put that question off into the future, then you avoid the pain of the process in the short run.”

Mitch Murch understands tricky family issues. He has five children but only two, his sons, are involved in his cleaning business. And just one child, Tim, is at the helm. Although his other three children have gladly chosen different career paths, Murch nonetheless has some feelings of guilt about handing over his business to just his two sons that may never vanish.

“How are you going to make things come out even? You can’t; it’s impossible,” says Murch. “It’s an emotional thing. The boys will get the business and the others will get the remains of the estate. The boys deserve it if they make it grow.”

When’s the best time begin the planning process?

“Today would be a good day to start thinking about retirement,” says Messick. “If it is true, and I believe it is, that the vast number of these people want the business to continue on beyond them, then they should be addressing these issues of succession, these conversations with their kids, early and often.”

Have a plan
Other than a touch of fatherly guilt, Mitch Murch planned his retirement well. He began planning early for his son, Tim, to eventually take his place.

“He learned the ropes as we grew and he put on different hats. He learned about purchasing, time and motion studies, who to buy from,” says Mitch. “He learned the ropes and I was willing to let go.”

The slow transition process also worked well for Tim Murch.

“It’s been a very good fit. I was able to carry the ball with him all the way along and then he could hand it off completely,” says Tim.

The Murchs’ gradual approach is exactly the correct way to handle a retirement, says Messick.

A BSC should share his or her knowledge with a successor early and often. Take the next generation to trade association meetings, introduce them to clients and suppliers, and put them in touch with leaders in the industry from whom they can learn.

“The people that I have seen do it very successfully, it becomes a seamless thing. If you are that 50 year old guy and you have a son that’s 25, then you need to do the things beginning today that will prepare them,” says Messick. “If it can happen over time in small ways so each person can grow into their future roles, then it never has to feel like it is happening.”

Thinking about retirement early isn’t enough. You must also have a formal succession plan in place. Everyone involved in the company needs to understand the plan and remain committed to it. The plan should lay out who will be in charge of the company and when. It should also define everyone’s responsibilities before, during, and after the transition period.

“With estate and succession planning, you think it’s done and you don’t have to deal with it, but actually you have to constantly be on top of it,” says Mitch Murch. “Review your plan at least annually, because laws and circumstances change. It’s a work in progress.”

Don’t go about blindly creating a succession plan without first consulting your family. Talk to the key players, your children, about their vision for the future of your company.

It’s important to have these frank discussions to come up with shared goals. If your daughter wants to be a lawyer in another state, then you need to all agree that you won’t be saving the business for her. If the son you always thought would take over for you says he’s not interested, accept it and move on.

“Once everyone is on board with where you’re going, then you can start working on the second key to retirement — having the money,” says Messick. “But shared goals are more important because it will keep you from doing things that are not financially productive or efficient.”

Money, money, money
When BSCs contemplate eventual retirement, they face conflicting financial goals of keeping their companies thriving while saving for the day they can cut the cord. But running a business and taking early retirement are not mutually exclusive goals.

One error that many small-business owners make is to put all their retirement nest eggs into one basket — and that basket is usually their business. Instead of depending on the sale of your business to fund your retirement, examine your options and think about diversification.

“If you start the retirement thinking today, then you can start to do those financial things that will help to ensure your success,” says Messick. “It’s different for each business. That’s where good advisers come in. Good advisers can only give good advice if you go to them with a clear picture of how you and your family would like to see things unfolding.”

Stay involved...but not too involved
When the day finally comes to retire, ease into it. Walking away from a career in an industry can be traumatic.

“The things that a 75-year-old knows, the experiences that person has had are still valid and important and need to be shared,” says Messick. “He may be one of those people who doesn’t believe fax machines will ever catch on, but he knows about running that business or about that industry.”

Just as important as it is for your sanity to stay involved, it is crucial to your successor and your company that you also know when to back off. Don’t second guess the new leadership, don’t sneak behind the new leader’s back, and don’t drive him or her nuts by offering up your opinion without being asked.

When Mitch Murch turned his business over to his son, he didn’t question his decision. Tim confirms that his father “doesn’t stick his nose in the business.” Sure, Mitch still drops in from time to time and still likes to talk shop with his son, but he leaves the important stuff to the new team.

“If they have a situation they want to run by me, I give my advice. If they don’t ask for my advice, I don’t give it,” says Mitch. “Our company has tripled in volume since Tim has been running it. He’s doing a good job without me.”

Becky Mollenkamp is a business writer based in Des Moines, Iowa. She is a frequent contributor to Contracting Profits.




POSTED ON: 11/1/2003