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View Full Version : Exit plan/ strategy and/or involving family in your business


irrig8r
08-18-2011, 01:05 PM
So, there was this thread in Lighting a while back... I thought there was something similar in this forum, but I can't find it.

http://lawnsite.com/showthread.php?t=244924&highlight=exit+plan


I'm not sure what I'm going to do as my body wears out... hadn't thought about it much. Figured I'd prob'ly die some day with my wet boots on...

But I got a call yesterday from one of my sons who is frustrated with the stress involved in his six-figure high tech sales job. I figured he was doing pretty well for only a year out of college, but although he is good at sales he hates all the time on the road (big territory), the cold calls, and the performance pressure.

He's thinking maybe he'd like to come work for me and in so doing build up the business, meaning offering a wider range of services, attracting more customers, etc. where my strategy for the last 15 years (except where he or his brother were available in the summer)or so has been to streamline, avoid hiring help, and go it alone.

I've talked about the pitfalls of self employment, including the effect of a down economy on consumer spending.

I've watched other contractors expand their businesses in boom times and get locked into expensive equipment and property leases that forced them to cut back and /or into bankruptcy in lean times.

So, basically, since I'm basically kind of risk-averse, and more of a tradesman than an entrepreneur, his idea to come in and expand the business and eventually take over makes me nervous.

Have you involved your kids in your business or do you know anyone who has? How do you/ they work out a succession plan?

irrig8r
08-18-2011, 02:27 PM
Hmmmm... 14 views so far but no responses...

Kiril
08-18-2011, 02:34 PM
Nothing to say .... thankfully I ain't got no kids.

FIMCO-MEISTER
08-18-2011, 02:36 PM
I tried to get Audrey involved in mine but she said she doesn't get dirt under her nails. Its a risk Gregg but family is family. Rather than look at the big picture and all the pitfalls break it down. First thing you need him to do is write up a business plan in great detail how all this is to happen. Get that done and it looks doable then the next step. Build on successes and the fears will dissipate over time. It will become apparent just getting the business plan done whether this will work or not.

bcg
08-18-2011, 02:36 PM
I've been growing on cash. The only time I finance anything is when I can get a very low interest rate, like 3.9% or less, and I keep enough cash in a high interest savings account to pay the debt off if needed.

My exit strategy is to build a business that runs without my day to day involvement. We're still a ways away from that but we're making progress. The lawn maintenance side requires almost no input from me, other than to occasionally correct the guys and to pay them every Friday. Irrigation is all me at the moment but I did that on purpose this year after going through 2 very bad hiring decisions in the last 2 years with the intention of hiring someone early for next season (like in Feb) that I can have trained and ready to go when the season gets rolling.

I think I'm probably 5 years away from having something that runs itself well enough that I can take a vacation during the season, probably 10 years away from not needing to be involved any more than I want to. I enjoy the back office side of this (marketing, sales growth, etc.) a lot more than I enjoy the actual work but I've got to have employees that I can rely on before I can spend all my time on that end. We could grow a LOT faster than we have if I could find good employees more easily.

As far as family is concerned, my daughter will be 16 in Dec and she's already been told that one day she'll be the office manager unless she comes up with something she'd rather do. She's not super motivated, prefers to take the path of least resistance so I imagine one day she'll be running this ship but she's grown up in it so I believe she'll do well.

irrig8r
08-18-2011, 02:54 PM
BCG, I haven't had to meet a payroll since I sold off my maintenance accounts to my former employees 15 years ago, but I still wake up in a cold sweat from nightmares about meeting a payroll now and again. No kidding.

irrig8r
08-18-2011, 02:56 PM
I tried to get Audrey involved in mine but she said she doesn't get dirt under her nails. Its a risk Gregg but family is family. Rather than look at the big picture and all the pitfalls break it down. First thing you need him to do is write up a business plan in great detail how all this is to happen. Get that done and it looks doable then the next step. Build on successes and the fears will dissipate over time. It will become apparent just getting the business plan done whether this will work or not.

Since he's the edjumucated college grad, with more formal business schooling than I've had, I think I should let him take the lead with that, and then just kind of guide it with some reality checks.

DanaMac
08-18-2011, 03:03 PM
Not that I have family to take over the business, but I would like to get the company to a point of running with little interaction from me. I just haven't taken the steps necessary to get there. I would like to have my two current employees work into that, but that have shown no interest in the day-to-day office operations. One may get forced into it anyway. Not knocking any of you older guys :) but this tech is mid to upper 50s, and he knows he can't do the daily grind forever either. But he has downfalls and really doesn't want to do all the paperwork and phone calls.

I would say have your son work for 1-2 years stabilizing the company and understanding the ins and outs before trying to grow it at this time. Or if he wants it to grow, try growing with your core focus, irrigation, for now rather than buy new equipment and start up services that you have not done recently.

I know, Pete will say spend and grow to benefit the economy, but you don't want to strain the relationship with your son if things don't work, and money becomes tight again. Actually Pete, I know you feel it is more profitable as a one man show anyway.

bcg
08-18-2011, 03:05 PM
BCG, I haven't had to meet a payroll since I sold off my maintenance accounts to my former employees 15 years ago, but I still wake up in a cold sweat from nightmares about meeting a payroll now and again. No kidding.

There were times in the beginning that I would lose more than a little sleep over payroll. The last few years we've not been even close to missing it, I've even been able to cash my own paychecks on time. :)

I can definitely see the appeal of staying small but I'm never going to be able to live the life I want if I'm the only one doing work. I had a business before this that was really just owning my own job because I could not replicate myself. I started this business because I didn't want to be in that position anymore/again.

FIMCO-MEISTER
08-18-2011, 03:11 PM
Total net profit one man show has its limits. % net profit then the one man show wins hands down. My only argument for one man show is when this is your alternative.
You've added debt, employees, secretary, office and you are making less or no more than what you would as a one man show but you've added a very high degree of stress and headaches. My personality would not allow me to be comfortable running or growing a business. I'm too intent on trying to make everything right for everybody. John Jr. has a much better personality for growing a business and all the risks involved. His quality will never match mine in service and I think he would agree with that.

SoCalLandscapeMgmt
08-18-2011, 04:18 PM
Your story sounds very familiar to mine Greg! I had been working for my dad off and on since I was 16 and part time while I was in college. I really had no idea what I wanted to do and no matter how hard I fought it I still found myself being pulled back into the family business because I really enjoyed working in landscape. When I was about 22 or 23 I came to work for my dad full time and at that point started trying to really grow the company. At one point in the 80's my Dad had built a pretty big operation but after the recession and loosing a key manager the company kind of languished for most of the 90's. I remember asking him what his long term plan was and he told me that he didn't really have one. He said he planned on running the company until he was no longer able and then sell off any remaining assets. By this point he was pretty burnt out. I remember thinking that his plan was pretty sad.... he had worked his entire life building this company and he was just ready to let it all go. Just as things were starting to happen he died suddenly of a heart attack in early 2002. By this point I was 26 and had spent most of the last 4 years working just about every single field position in the company. Maintenance, Irrigation, Construction, Supervisor etc etc. I knew all of the field operations forwards and backwards and my dad ran all of the back end of the business. Very quickly I found myself behind a desk instead of in a truck. It was quite the abrupt learning experience. By 2008 I had taken the company from 9 employees and $340K in revenue to 50 employees and over $1.5mil in revenue. I learned a lot... some of it the hard way.... but we're still here and the trucks still roll out every day.

I guess my advice would be that if you son wants to get involved make him start at the botttom (sounds like he already has some field experience) and learn the basic operations of the company. Once he learns the field end of the operation make sure he knows the business end. Luckily I knew enough of the basics to keep us out of trouble. The other thing would be to have a clear plan for the change in ownership if your company is a Corporation or an LLC as well as a contingency plan just in case one day you're suddenly not there anymore. We had none of that and it made things difficult as we transitioned the ownership of the company to my name. If he intends to grow the business make sure you have a solid map and a written plan. I didn't. It was all in my head and changed frequently which in hindsight was a really stupid way to grow. Pick one or two areas of focus for expansion. When my dad was around we did everything. At the peak of the boom a couple of years back we walked away from commercial construction and focused solely on commercial maintenance. everybody told me i was crazy..... they don't tell me that now. It's better to do one or two things really well than to do everything all halfassed.

I think it's great that your son wants to be a part of your business. I'd say let him come on board and see what happens. You'll still be in control of the thing so you can make sure that nothing crazy happens and if things progress in a positive direction you can slowly turn more and more control over to him as you get closer and closer to thinking about retirement. My dad was very much like you say that you are in that he tended to be very risk-averse but he did let me have some freedom to make big decisions. I've made some HUGE decisions that I know he would have never made but I think he would have understood even if he didn't agree with them. I wish that he was still around because he taught me 90% of what I know about the business and there are still things that he could teach me.

That said.... Good Luck!

SoCalLandscapeMgmt
08-18-2011, 04:48 PM
Oh and if he comes to work for you I would immediately add him to your contractor's license so that if and when the time comes he'll be able to qualify for a license without having to take the test and all of the nonsense.

irrig8r
08-18-2011, 10:26 PM
Your story sounds very familiar to mine Greg! I had been working for my dad off and on since I was 16 and part time while I was in college. I really had no idea what I wanted to do and no matter how hard I fought it I still found myself being pulled back into the family business because I really enjoyed working in landscape. When I was about 22 or 23 I came to work for my dad full time and at that point started trying to really grow the company. At one point in the 80's my Dad had built a pretty big operation but after the recession and loosing a key manager the company kind of languished for most of the 90's. I remember asking him what his long term plan was and he told me that he didn't really have one. He said he planned on running the company until he was no longer able and then sell off any remaining assets. By this point he was pretty burnt out. I remember thinking that his plan was pretty sad.... he had worked his entire life building this company and he was just ready to let it all go. Just as things were starting to happen he died suddenly of a heart attack in early 2002. By this point I was 26 and had spent most of the last 4 years working just about every single field position in the company. Maintenance, Irrigation, Construction, Supervisor etc etc. I knew all of the field operations forwards and backwards and my dad ran all of the back end of the business. Very quickly I found myself behind a desk instead of in a truck. It was quite the abrupt learning experience. By 2008 I had taken the company from 9 employees and $340K in revenue to 50 employees and over $1.5mil in revenue. I learned a lot... some of it the hard way.... but we're still here and the trucks still roll out every day.

I guess my advice would be that if you son wants to get involved make him start at the botttom (sounds like he already has some field experience) and learn the basic operations of the company. Once he learns the field end of the operation make sure he knows the business end. Luckily I knew enough of the basics to keep us out of trouble. The other thing would be to have a clear plan for the change in ownership if your company is a Corporation or an LLC as well as a contingency plan just in case one day you're suddenly not there anymore. We had none of that and it made things difficult as we transitioned the ownership of the company to my name. If he intends to grow the business make sure you have a solid map and a written plan. I didn't. It was all in my head and changed frequently which in hindsight was a really stupid way to grow. Pick one or two areas of focus for expansion. When my dad was around we did everything. At the peak of the boom a couple of years back we walked away from commercial construction and focused solely on commercial maintenance. everybody told me i was crazy..... they don't tell me that now. It's better to do one or two things really well than to do everything all halfassed.

I think it's great that your son wants to be a part of your business. I'd say let him come on board and see what happens. You'll still be in control of the thing so you can make sure that nothing crazy happens and if things progress in a positive direction you can slowly turn more and more control over to him as you get closer and closer to thinking about retirement. My dad was very much like you say that you are in that he tended to be very risk-averse but he did let me have some freedom to make big decisions. I've made some HUGE decisions that I know he would have never made but I think he would have understood even if he didn't agree with them. I wish that he was still around because he taught me 90% of what I know about the business and there are still things that he could teach me.

That said.... Good Luck!

Thanks for sharing your story. It's given me a lot more to think about.

txgrassguy
08-19-2011, 10:13 PM
My plan, briefly stated, was to grow my business to the point I was strictly a "hands clean" supervisor. At one point I was up to ten full time and three seasonal laborers and was grossing right at $985K with a net profit averaging 11%.
Then along came the train wreck of my divorce, over $600K lost coupled with a severe initial down turn in the economy - meaning now it is me and one guy five years later.
Net profit is way up but my hands are now quite dirty.
And my exit strategy vaporized with all of my capital.
Some of you may know I was approached by a national chain wishing to absorb my client base and equipment assets. The idea being I would remain on staff, as a salaried manager, while transitioning the accounts as well as offering what ever input I may have after twenty years in this industry.
Then along came the irs thanks to my ex-wife - however it appears that this may end on more or less sufficient terms. Meaning I may be able to sell off the business and get a pay check along with the buyout.
While I am nowhere near to recouping the losses associated with these two nightmares, if I can sell (which does appear likely) than I will finish the transition period and do one of four things in order of probability.
1. After the transition period simply resign and once again become a full time sworn peace officer. The local Sheriff and I have developed quite a rapport so I may just end up in a Detective Bureau again.
2. After the transition period begin to aggressively research acquiring an up-scale private golf course to manage. Only this time off shore in some Asian country.
or 3. Agree to teach college at the under grad level while finishing a Master then a Doctorate.
or - and this is becoming much more attractive all of the time - after the transition period take my 4X4 truck and relocate to some Central American country with a high Americanized expatriate population and work for some wealthy people and enjoy the warm seas.

FIMCO-MEISTER
08-19-2011, 10:18 PM
So what's the problem?

txgrassguy
08-19-2011, 10:28 PM
Ah, I'm just tired tonight. Got back from yet another callout involving people so stupid they shouldn't be allowed to reproduce. Since the beginning of August I am at sixty-four hours on different fires and it is beginning to wear on me a bit.

FIMCO-MEISTER
08-19-2011, 10:31 PM
You need a Mizzou River fishing trip dude. The hoppers are starting to get active.

Mike Leary
08-20-2011, 04:03 PM
So what's the problem?

Seems pretty normal to me.

RussellB
08-20-2011, 04:59 PM
My youngest son is in his last year of college. If when he gets out he decides he wants to get involved in my business and grow it, I will stand 100 percent behind him. In fact I hope one or both of my sons gets involved.
Posted via Mobile Device

txirrigation
08-26-2011, 03:02 PM
Just make sure he understands this:

Business is Business

Family is Family

I come from a family of all self employeed Men who have at one time or currently employeed family members. When at work they called each other by Name, not Dad, Son, etc. Any business disputes stayed at work, and business talk was not allowed at home. Draw CLEAR boudries up front so that you do not hate each other in the end.