You’ve built your repair shop or jobber store over many years: Do you have a plan for when it comes time to sell?
If not, you’re only making things difficult, warned Bob Ward, owner of Perpetual Business and an expert in business succession planning.
You have two options: Either you have a plan that outlines time, conditions, money to ensure a comfortable ride and easy transition for your life’s work; or you exit in an unexpected way — by death, illness or wearing yourself out — and you don’t have a buyer.
In small businesses, of which many automotive aftermarket businesses are, 85 per cent do not sell and only 15 per cent successfully transition to the next owner, according to Ward.
A generation ago, 60-65 per cent of small businesses didn’t sell.
“Things are very different now. It seems like things get harder every generation that goes by — making more money with less qualified people, less driven people that are willing to persevere and solve all the challenges of small business ownership,” Ward said at NAPA Expo 2022. “There’s lots of reasons why things are not like they were a few years ago. We can’t do anything about that except to adapt and make sure that we have a plan.”
A common reason why business owners don’t think about succession is a lack of time. “We’re not thinking about 20 years ahead, 10, or maybe even five, until we get to 60, 65 or 70,” Ward said during his session, Succession: The Ultimate Objective. “But we don’t think about them because we’re running a business.”
There are a few risks of not thinking ahead. First: You’re not going to get paid for your life’s work. Second: If the business hasn’t been properly prepared for a transition, then it stands a good chance of soon failing for whoever is following you. Remember, that may be a family member who takes over the business.
“You’re risking that person’s future, not to mention all of your employees and their families that rely on your business for their livelihood and well-being,” Ward pointed out.
Third would be your customers and the community. Where would your customers go? You’ve built up years of trust — then you’re suddenly gone. And you may also be an integral part of your community, taking part in local business associations or events.
“But we don’t think about that most times — we’re just running our businesses,” Ward said. “I want you to realize how important it is that you have a succession plan.”