Management trainer Bob Greenwood put out a call for reader questions… and you’ve responded!
The questions are coming in, and we’re going to highlight some of the more pressing ones questions that Bob will tackle in the next series of videos for Greenwood’s Garage.
If you’ve got an issue or concern, or you’re just curious about how some of the numbers in your business come together, feel free to send them in your question– either directly to Bob at email@example.com, or in the comment section below.
Here’s one from Jeff Hogue, owner of Jeff’s Old Volks Home in East Chester, N.S.
Hey, Bob! What are the first steps in building a proper business succession plan? My son, who’s been in the business with me for eight years, will be ready in the next few years to take over. I’m ready to retire but I don’t know where to start. Thanks for all you do for our industry!
Bob will offer a full answer in the next season of Greenwood’s Garage, but here’s a teaser:
It’s great to hear from you. Thanks for sending in your question.
Before we get too far in discussing a succession plan, I should ask if your son definitely wants to take over the business. He’s not being forced into it, is he? That might sound like a rhetorical question, but believe it or not, I’ve seen cases where the younger generation was being pressured to continue what their parents had started. No succession plan will work effectively if it’s not what everybody involved wants!
Here’s four things to consider:
1) Be very open with each other and discuss what you will require, financially, to retire and what he is hoping to achieve in the first five years of owning the business. This is a sensitive subject but I have been through this before with clients and when it is approached in a “business like” fashion and not an “emotional family like” fashion it goes very well. Both parties must be very mature here.
2) Visit with your accountant and or a person who can evaluate the worth of the business so a fair price is established for all and then the method of payment must be discussed in detail. You want to come to an agreement that both parties are comfortable with. Tax planning should also be discussed at this meeting. And are you going to work toward a share purchase or an asset purchase? Don’t be surprised if you end up financing a good piece of it yourself! If that’s the case, you’ll want to remain involved “behind the scenes.” This might entail receiving the monthly financial statements for your review.
3) Make sure he is immersed in business management training. He needs to fully understand his new role and how to do it properly so he can work “ON” the business and not getting caught working “IN” the business like so many owners do. Enrol him in classes, and go with him if possible. The two of you need to be on the same page so you can discuss how the business will move it forward. Look for one- and two-day classes to start with. If there are three- or four-day classes, consider those as well. I know many instructors so don’t be afraid to ask me for an opinion. I would be happy to assist where I can.
4) Visit your lawyer to put everything in writing and come to clear agreements about functions and authorities until the deal is completely paid off. Also Life Insurance will come into the picture.
There are lots of things to talk about, Jeff, but I hope I’ve given you a few ideas about how to start the process.
Stay tuned to Greenwood’s Garage, here on AutoServiceWorld. And send in your own question for Bob!