Every restoration company owner will need to retire. It could be a planned retirement, health issues or death, but you will not run your restoration company forever. Knowing this, it is important to think about what will happen to your business after you are no longer able to manage it. Who is going to take over your restoration company? Will you pass it down to family, choose someone from within or sell it to an outside investor? All of these are potential options, but you must have a succession plan ready when you eventually leave your restoration company. When it comes to creating a successful succession plan, time is your friend. The more time you have to get your ducks in a row, the better shape your restoration company will be in when you retire. Here are the most important things restoration company owners should consider when creating a succession plan.
Know When Your Succession Plan Should Be Created
Business owners often put off thinking about retirement. You have a company to manage, and managing it is a more important matter than thinking about retirement. However, you must establish a timeframe on when you would like to retire. In order to plan for succession, you have an idea on when you will hand over the company. This timeframe will help figure out when the real planning should begin. I recommend that you start planning to sell your business at least two years before you step away from your restoration company. This is the bare minimum timeframe and the longer you have to plan the more time you will have to get financials in order and most importantly find the best successor or find a reputable buyer.
Brian Bond, owner of Phoenix Arizona business brokerage Strategic Business Brokers Group says time is essential when creating a succession plan to find the right buyer for your restoration company.
“You are going to create more value for your business if you have the time to prep a sell for the best buyer,” Bond says. “Selling your business for top value means having accurate financials, a healthy client pipeline and working equipment. You need time to organize and build these things up, and if you do it right your business will be valued more.”
Have a plan to step down and give yourself at least two years to formulate that plan because this is only the first step in retiring from you restoration company.
Interview Potential Successors
Look ahead and start searching for potential successors within your restoration company or vetting people outside the company to take the reins.
Run a behavioral skill set assessment on anyone who would be a good fit to run your company. You should do this even if you plan to hand the company down to family. A behavioral skill assessment lets you find leadership qualities in potential successors. The people you want to run your restoration company are not always the best choice, and this assessment will give you the tools to identify what leadership skills they have. Then you can either train them to obtain those skills or find a new successor. You must think ahead and find a successor as early as possible. They will need the extra time to get training and shore up the skills they may lack.
Your replacement must align with your business’s values, they must be an organizational fit meaning your team must believe in them. They must be innovative, entrepreneurial, and most importantly, understand people and have humility. Your replacement should understand a room, show self-awareness and should not have a huge ego.
Write out what you envision their role would be. What is your job as owner now, and what would be the job of your replacement? When would they take over the company and what is the plan to onboard them?
Prepare Your Successor for Your Departure
You must have a plan for how you will bring your replacement into your restoration company. Selling your restoration company is not like selling a car. You don’t just give them the keys and leave. Train your successor and ensure they are ready to do the job before you step back. Conduct a trial run where your replacement runs the company for a few weeks. You must only step in to help during an emergency. Leaders learn to lead by leading, so let them lead. You must let them learn and, most importantly, let them make mistakes. Allow your replacement to run your restoration company and force them into high-pressure situations. If they are able to thrive in these scenarios, they will be fine running the business on a daily basis.
Let your employees and customers know what is going on so they understand what is going on and who is going to be leading the pack.
Teach Them the Industry
Train your successor to understand the landscape of your restoration company. They must know the salary of every employee and the return on investment they bring the company. Your successor must understand the history of your restoration company, the current state of the industry and the current state of your competitors. They are going to need to start building relationships with clients, customers and vendors to ensure those long-term relationships you built stay together.
Your successor should be aware any legal or financial liabilities your restoration company may have. Don’t hide things from your replacement.
Bond says if you are planning on selling the business, you must disclose the financial health and liabilities of the business. “The person buying your restoration company must know the revenue of your company, the expenses of your company and the gross profit margins,” he says. “Why did you procure these expenses, and how are you dealing with them now?”
You will eventually leave your restoration company, so it is important to create a succession plan. Establish a plan at least three years before leaving your business, find the right replacement and give them what they need to succeed. If you do this, you will ensure the health of your restoration company long after you are gone.