Today, I’m sharing part one of a two-part series about succession planning. In the contracting industry I see so many folks who have been working for 30 years, 40 years, and beyond, who want to transition out of their businesses but they don’t know where to begin and as a result, continually put it off.
Knowing how to plan for your phase out or complete succession from your business is the pathway to you being able to reap rewards from the hard work the you’ve put into it over these many years. And proper planning, as my guest today will share with you, can help you save money and increase your return as well.
One of the companies that successfully made the transition is Carmel Builders in Milwaukee, WI. Today, my guest is Louis Weiher, the owner and president since 2016. In my next blog post, I’ll interview his parents, Tom and Barbara Weiher, the founders of the 40-year old design build build firm.
Whether you’re on either end of a possible succession or just wondering about your eventual retirement, these two interviews will help you navigate your way to a successful transition.
Louis’s number one piece of advice is to start early. “We should have started sooner and planned it out better because, between my dad, my mom, and I, we all wanted the exact same thing, but it’s still really hard to get to that.”
Like many family-owned companies, it was just an assumption from the time Louis came on board (after a stint in the hotel industry) that he would take over one day, but they didn’t plan anything out for the first few years.
It took several years to make a clear decision together that he would take over the business. It would have kept things simpler and saved money, he said, if they had sat down for those conversations earlier.
When I asked what part of the conversation he wishes they begun earlier he said “making the distinction of the differences between who owns the company, who manages the company, and who leads the company. Those are three separate things. Ownership is what most people initially think about, and management is fairly straightforward, but leadership is a sticking point. Who do people look to when challenges arise? Whose actions set the tone of the company?”
Louis recommends getting the management role in place first, then transition the leadership, and finally the ownership can happen whenever. Ownership doesn’t affect the employees as much as who they’re reporting to and who is leading the vision of the company. Looking back, he wished they had communicated the leadership transition plan and timeline to the rest of the team earlier on and more clearly. Staff knew it was happening, but regularly checking in would have been helpful for everyone and made the transition smoother.
I particularly liked his suggestion of setting a transition job description that includes what the ascending leader will be doing this year, next year, and so on in terms of taking over management responsibilities and leadership of the company. You can get my outline for 6 Steps to Writing Great Position Agreements to help you get this piece in place.
Be sure to nail down a firm mission statement and set of core values before going through a leadership transition because they can guide you, as well as bring the staff and the new leader into alignment. It builds a lot of buy-in from the team.
Louis says for them, core values answer 90% of the questions and challenges that came up with he and his folks. Carmel Builders’ core values are:
- Be kind.
- Do the right thing.
- Seek to collaborate.
- Consider the future.
What is remarkable is how those core values continued the legacy of his parents through to his leadership. It’s a guiding post for every decision, and yet it’s so simple.
He also shared the financial component of their succession. For many owners, the business is their retirement plan, and that was the case for Louis’s parents. But at the same time, they didn’t want to see their son go into debt to buy the company. So the arrangement they came up with was creative and benefitted everyone.
- Louis became majority owner
- His parents retained a minority share of the corporation, and thus continue to get profit distributions
- His parents got to keep a sense of connection to the business, while Louis maintains the operations.
His advice to the successive generation when considering the financial arrangement is “Don’t take for granted how big of a deal it was for the previous generation to start something from scratch.”
Along the way they, and he, spent time building the foundation on which the company could be transitioned to the next generation. They put in place processes, procedures, and standards – all of which helped build a solid foundation that let Loui’s parents gradually transition out of the business.
Whether you’re looking to simply work less in your business, or transition it to the next generation, building systems that can sustain success in your absence is key. In my book, The Profit Bleed, you can find tools and free downloadable resources that can help you get those process and systems in place – and all you have to pay is shipping and handling. Make sure to check out the bundle of pre-packaged resources when you check out.
When I asked Louis if he had any final words of advice for anyone thinking about succession-planning he said, “It’s more important to focus on what you agree on and don’t try to fix everything you disagree on because you’re never going to agree on everything.”
Make sure to watch the whole video interview with Louis, and stay tuned for A Contractors Succession Plan Part II where I interview Louis’s parents Tom and Barbara.
Warmest,
Vicki
PS. Get Louis’s free checklist 12 Tips to Successful Succession.
PPS. I’d love to know if this interview resonated with you as you think about succession planning. Leave a comment below if you have questions we didn’t answer or share a helpful tidbit you have about this topic.
Vicki Suiter helps people see their businesses differently, then gives them the tools to do things differently. Since beginning her business in 1990, Vicki has helped hundreds of contractors achieve the kind of success they never dreamed possible. Today, in addition to consulting, Vicki is an in-demand speaker at industry conferences nationally and internationally. Vicki’s articles and opinions have been widely shared in print and across the web. She is also the author of the book “The Profit Bleed” How managing margin can save your contracting business.