- Start Leadership Succession Planning Today
- Forging A Smooth Business Transition
Family Business Consultants Aid Change
Attorneys and law firms aren’t the only resource BSCs can turn to when they begin planning for a transition. Family business consultants and advisors are able to walk ownership through a bunch of different scenarios.
Just ask Mary Miller, who along with her husband Tony, is the founder and owner of JANCOA Janitorial Services, Cincinnati. Now in their 60s, the couple is trying to figure out what the future looks like for both them and JANCOA. With a daughter and in-laws holding important positions in the company, a transition to the next generation seems to make sense. Now, it’s just planning.
“I think the most important thing is to make sure you have a great team of trusted advisors,” says Miller.
Every transition needs a good financing strategy and an advisor is the person or persons who can make sure all the numbers work, says Miller. Advisors can also sort out all of the family dynamics, something both Miller and McLemore say is an important part of the succession process. (Who gets stock and how much? If you have three children, might one have been a greater help to the business than the other two?)
“Some will have multiple children, but only one of them will work (at the company) for years,” says McLemore.
He adds that if such a situation arises and all the kids get equal amounts when the business is passed down, the one who committed more might have some hard feelings. It’s because of situations like this that a quality succession plan is vital.
Advisors also help families to get out of less-than-ideal situations. Take for example a situation where owners are ready to retire, but the successor needs a little (or a lot) more seasoning. An advisor or strategic business manager can come in during the transition to smooth things over until the heir is ready to lead.
BSC owners should also be wary of forcing any situation. If it appears that the family member or members that the owner always hoped would take over just doesn’t have the ability to lead, there’s no harm in looking at other options.
As Miller says, its more important that a BSC has talented workers lined up to take over than it is to preserve a status.
“There is a danger of letting the family members take over the business if the right skills are not in place,” she says. “Being family is not the most important requirement to be successful in the transition plan.”
When there’s no right heir available, a BSC might have to sell. And that’s not exactly a bad thing. In fact, the sale of contract cleaning companies is very much en vogue.
“There has to be renewed interest in selling the company right now because the prices are pretty darn good,” says McLemore.
But don’t be fooled. What the seller thinks it’s getting from a sale isn’t always what ends up being the case.
Miller says the sale often seems glamorous because of the price tag, but owners making the move must also consider how long they plan to live in retirement, as well as the quality of life they’d like to maintain.
Whether it’s selling or passing down the business, one thing is for sure: the right decision differs from situation-to-situation. A lot goes into either selling or setting up a succession plan, so whatever decision a BSC makes should be based on a lot of research and soul-searching. An owner needs to figure out what he or she wants out of life after the sale, but might also want to consider how the move will impact the lives of family and employees.
However, owners don’t want to be caught standing flat-footed. A failure to act at the right time could also mean missing out on a good opportunity. It just depends on the situation.
“There’s no easy answer on either side,” says Miller.
Forging A Smooth Business Transition
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