Independent, family-run businesses are an integral part of British culture. Steph Brown offers some tips on how to make sure there is a succession plan in place for your business.
When it comes to fitting a new boiler or bathroom, a community’s local plumbers and installers are often considered the most convenient and trustworthy by customers.
Family businesses are also important contributors to the UK’s economy. PricewaterhouseCoopers’ (PwC) most recent UK Family Business Survey revealed that 60% of UK family firms have generated consistent revenue growth so far this year, while 94% have plans to grow their core business.
This figure is even more impressive when you compare it to the figures in the Federation of Small Businesses’ Small Business Index for Q3 2017, which revealed that a record proportion (13%) of business owners currently expect to downsize, sell or shut up shop.
However, PwC’s report also recognised that family businesses are not without their fair share of challenges. The number one being strategic succession planning. Only 13% of UK family firms felt they had a robust succession plan in place, compared to a global average of 15%.
If you’re planning for the eventual transition in ownership of your plumbing or installation company to a family member, it’s vital that you have a concrete succession plan in place. So, whether you’re planning on handing over your business within the next year, or not for another decade, here are some top tips you need to consider when succession planning.
Start now, not later
Most business owners in the plumbing and heating industry have to juggle a lot of responsibilities, so succession planning is something that can easily fall to the bottom of the list.
Building a detailed succession plan can take as long as three years by the time you’ve firmed up a decision. In addition to this, implementation is not always smooth sailing, so it’s better to get a head start.
Invest in the next generation
This is often the biggest pitfall when it comes to succession planning. Business owners can be so preoccupied in the present that they forget to build the skills and engagement of the successive generation.
Not only is engaging the successor in key business discussions important, but investing money into training is also worthwhile. After all, the successor needs to be willing and if they’re engaged in the business they’re more likely to step up when its required. Training can increase the experience and capability of the successor, as well as making them feel valued.
Exchange and accept ideas for the future
It’s important that business owners sit down with the person they plan to hand their business over to and talk through ideas for the future of the business.
Roles and responsibilities of the predecessor and successor will inevitably change before, during and after the course of the succession plan and, understandably, it can be hard to let go of your vision for the company.
Remember that while your experience and consultation is invaluable as the owner, don’t hold onto the business too tightly. As the successor gains more responsibility, it’s vital that you’re open to some change.
Get clued up on the figures and finances
Whether it’s invoicing or wages, finances can confuse even the most experienced of business owners. It takes a long time to learn the ins and outs and a successor should know who they can turn to if finances for the month don’t go exactly to plan.
A healthy cashflow is crucial to the success of any business, and although your accountant can help when it comes to bookkeeping practices, there will be a number of issues they won’t always have the knowledge to deal with.
A business owner should fill the eventual successor in on all the various financial options available to them and how to keep the business on its feet in good times and bad. For example, a good funding partner can offer plumbing businesses number of different loans suited to individual needs – which can be an easy way to help when it comes to solving a cashflow issue.
Succession planning is extremely important if you’re to ensure as smooth a transition as possible when you pass on your company. After all, small businesses can be fragile and subject to forces that are out of their control. Get the ball rolling early and you’ll be able to rest assured that your business will continue to flourish long after you’ve handed over the keys.
Steph Brown is Senior Funding Manager at Ashley Finance