Business Succession & Transition: Let’s Talk
Shared insights from 3 Calgary entrepreneurs
Succession planning seems to bring out the best procrastination skills in every business owner. We get it. It’s not an easy event to face, but without a plan for succession, you can put yourself, your family and your community in an undesirable situation.
Inspired by our upcoming Education Forum on Business Succession & Transition, we interviewed our three Forum panelists who have created, or are in the process of creating a strong succession plan. We hope that their personal experiences and insight can give you the inspiration you need to start thinking about this important process.
The Panelists:
Jeff Neufeld
President, Trimet Building Products Inc.
Phase of succession:
Currently enjoying working in his business; grooming his team to function without him. Jeff is nearing a point where he doesn’t have to be on-site every day.
Dream:
Freedom to decide whether he wants to go into work or not. To hit the road in the RV with his family, for up to six months at a time.
Relationship with Stawowski McGill:
Jeff engaged Stawowski McGill two years ago. At the time, Jeff was frustrated with the pace of his decision-making and felt uncertain about whether he was doing the right things, for the right reasons, in the right order.
Ryan Arsenault
Director, Drakken
Phase of succession:
Ryan is still very active in his business (by choice) and has successfully created and groomed a team to lead in his absence.
Dream:
To spend more time with his kids.
Relationship with Stawowski McGill:
Ryan engaged Stawowski McGill about 5 years into his business operations, seeking assistance with mitigating risk. Ryan and Stawowski McGill have been collaborating on his succession plan for the past 18 months.
Stan Stawowski
CPA, CA, Partner at Stawowski McGill
Phase of succession:
Semi-retired with limited client responsibilities, Stan has groomed and promoted new partners, each of whom have successfully stepped into leadership roles within the firm.
Dream:
Stan’s dream is to leave a legacy of service to private businesses and their families and to ensure a solid foundation for the firm and its team to grow and prosper well into the future.
Relationship with Stawowski McGill:
Founded the firm in 1983.
Let’s Talk:
What are some of the common concerns and issues clients face when it comes to succession and transition planning?
SS: During my years as a Business Advisor, some of the concerns I’ve addressed with clients are:
Not having the right people in place
Being unaware of one’s options (will the business be desirable enough for someone else to purchase it?)
Procrastination – Failure to Implement (FTI)
78% of entrepreneurs do not have a plan for succession. Why do entrepreneurs put it off and what are some repercussions of failing to implement a succession plan?
SS: People put it off because it’s an unpleasant thought. This is human nature; no one wants to think of getting old, and people often choose to believe things will simply work out on their own. They put it off until a pain point (illness, financial or family issue) forces them to act.
Failing to plan can create a diminished legacy for your family. Many entrepreneurs leave their family with a mess to clean up because they didn’t plan, which allows lawyers to make decisions for them (ones the owner probably wouldn’t have liked). It’s also important to think of the clients who have been loyal to you – what kind of situation are you leaving them in?
When did you start thinking about succession and transition?
JN: I was thinking about it on day one of taking ownership, as it was my intent to buy a business, make it profitable and then sell it or transition out. I wanted to create options for myself, so I knew it would be important to implement a succession plan. After achieving my initial objectives to grow my business and meet my financial goals, the next step was to start working on a plan for how I could be replaced. One of the first steps Stawowski McGill recommended was to enable and create competent team members who would not just help me but would also be excited about a future in leadership.
RA: I was working up to 80 hours a week and spending approximately 6 months of the year overseas. As my family started to grow, my priorities shifted. I wanted to be able to spend more time with my kids. Knowing this, we began succession conversations early. Josh Ronald helped me come to the realization that in order to keep my options open (in terms of a potential sale one day), I needed to work on getting the right team in place. Promoting an internal group has been key in my succession plan.
What has it been like to “give up your baby?”
JN: It’s hard to let go. It’s only human to feel like you’re the only one who really understands the needs of the business and to believe that no one else will ever care about it as much as you do. But guess what? There are specialized people out there who, when given the opportunity and a bit of trust, can help you keep the business running smoothly. After enabling and informing these individuals, our margins improved – I could see the succession plan working!
What positive change(s) have you seen in your business as a result of your succession plan?
JN: As an entrepreneur, I’ve worn many hats; from working as a part-time CFO to Sales Manager. Stawowski McGill helped me to see the value in being the President. It’s not a figurehead job. If you want to grow, it’s the most important job. With a succession strategy in place, I’m able to remove myself from day-to-day tasks and engage full-time as the President.
Stawowski McGill has helped me make decisions with confidence and create options for my future transition. With a healthy business, I can decide how I want to proceed without being forced. Brian McGill helped me to increase my vocabulary to talk about succession with my team and has granted me the courage to take the next steps.
What element(s) of your succession plan have been the most effective?
RA: Relationship management. Through Stawowski McGill, I hired a coach who quickly uncovered a communication gap in my organization. We learned that our communication was ‘closed’ and that if I wanted to have an effective succession plan, I needed to address it. Clearly communicating my succession plan to the team was monumental to a successful implementation. Closed off or unclear communication could have resulted in personnel loss, confusion and jealousy. Along with the gap analysis, Stawowski McGill mitigated risk by helping me to develop job descriptions, criteria for future leadership and the skills necessary to mentor and groom my team to grow in their roles.
What advice can you offer other entrepreneurs?
JN: Get over your ‘independent streak’ sooner!
SS: Be prepared to get hit with some honesty. Is your company positioned to go into the next 20 years? Before you can implement a successful plan, your company must be profitable and financially stable. The truth isn’t always easy to deal with, which is why a Stawowski McGill Business Advisor will be your best ally.
There are many positive outcomes to succession planning: discovering what’s truly important to you, developing yourself professionally and creating exciting opportunities for others.
RA: Communicate clearly what succession means to each person on your team.
Don’t put a succession plan in place if you have no intention of releasing control. Many people say they want to let go but they’re not actually ready. You must give people the freedom to navigate and learn their own lessons if you want them to succeed. Don’t take decision making power away once you’ve granted it.
Be realistic about your approach to succession and the length of time it takes to successfully implement the plan.
Entrepreneurs, we know this is a daunting subject but as our panelists have testified, creating a succession plan puts you on the path towards achieving your dream; whether it’s spending more time with your family or traveling without worrying about what’s happening at work. No matter what stage you find yourself in, it’s important to understand your options.