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With baby boomers entering or nearing their goal retirement age, companies across the country are preparing for a change in leadership. Building service contractors are no different. However, not every BSC has an heir apparent to its leader. Even some that do could face issues if the successor isn’t quite ready to take over by the time the current leader retires. In any situation, it behooves BSC owners to always have a plan for succession in place, and to weigh other options, such as selling.
Curtis McLemore is only 48 year old, so the pressure isn’t yet heavy on him to finalize a succession plan for when he retires as the second-generation owner of McLemore Building Maintenance, Houston. However, that doesn’t mean he can’t do a little bit of preparation.
“My children are still 14 and 12, so I probably have another 10 years before they would even be remotely considered for things,” says McLemore.
Given their age, McLemore’s kids still have plenty of time to decide what they want to do with their future — and that’s OK. He and others in a similar situation can continue to weigh the options of either selling or passing on the business without risking the viability of their golden years by simply planning for retirement.
“(You) put money away and make decisions necessary to have that option to pass it down to kids,” says McLemore.
To Each Their Own
McLemore’s strategy works for him, but it’s not going to work for everyone. Aspirations are different, families are different, and even one person’s definition of retirement can differ from another’s.
While some owners and founders might elect to “semi-retire,” others leave the position completely, but still enjoy the perks. McLemore says many companies are keeping their founders on payroll. As a result, the company essentially has a situation where they have two CEOs receiving checks, but only one acting as leader. Other founders will supplement their retirement by asking their kids or successors to buy the business from them when they step down, allowing them to fund the life they desire.
Succession isn’t just a family affair. In some instances, the founder or owner of a BSC might opt to pass the business down to the people that often help build it: the employees. In this event, something like an employee-stock ownership plan could be a viable solution.
According to The National Center for Employee Ownership, employee-stock ownership plans allow business owners to sell some or all of their shares in a business to a trust, which owns those shares for the employees. With a plan like this, the employees know their jobs are better protected and they have retirement benefits, so it can be a nice way for owners to say thanks.
Semi-retirement wasn’t an option for Paul Greenland because he made the choice to sell his third-generation business, Aetna Integrated Services in 2017. Greenland, who is in his 50s, wasn’t actively looking to sell, but when he was approached with an appealing offer he decided the timing and situation was right. Neither of his daughters were interested in taking over the business and the only other option — his nephew — wasn’t even old enough to drive a car yet.
“Every situation is different,” says Greenland. “It depends on the age of the owners and what they want to accomplish with their lives.”
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