I decided to get into a succession talk with my father this vacation and it was interesting. He owns 5 stores, 2 biggest volume sellers that are 30 min away, and 3 stores that in our surrounding towns. My idea was to sell one store to my sister and one store to myself, hopefully at a discounted price from my dad. We could then sell these stores and invest the money into the business model of our choice. My father objected and said that he would not sell any of them, which left us in a standstill. Basically it seems like if neither one of us is willing to stay in the business, he is going to continue working for much longer than he needs to. I do not want him to continue working, but I also do not want to sell coffee for a living.
His argument is that the business model is more profitable than others, so he wants to keep it in the family. The business requires him to work about 50 hours a week. Do you think that we could hire someone that does virtually 95% of the owners work but then just receives a salary? I am thinking that if they received a commission this system could work. I'm curious if anyone has managers that do nearly everything for the business.
I am thinking it would be best to use the help of a succession planner so that this can be done fairly and to the benefit of everyone
Your father has run his business for a long time, he loves it and he does not want to see it go, that is understandable. But, you have to find out what is his real reason. It may be that he does not know what to do with his life if he does not work 50 hours a week, or he will miss being recognize and admired by others for what he does, or he just had the dream of his family carry on his business for generations...
In any case, you can definitely find a dedicated manager that if compensated and recognized accordingly will do a great job. The problem could be that your father may have a difficult time delegating and letting go. It is a process and he has to see what is in it for him (ie more time for his hobbies, better health, less stress, his kids keeping the business in the family as owners in the future...)
Working with an advisor or a coach could help if he is open to it. If you need for info, please email me at firstname.lastname@example.org
This reply came from David Mount, owner of a Westaff franchise here in Burlington (www.westaffvt.com):
I have a number of comments.
1. The 5 stores may be your father's principal income sourse so that hiring a manager who will do 95% of the work may provide a significant drop in your father's income, thus making it difficult for him to live in the manner he has become accustomed to.
2. It is always difficult for the founding entrepreneur to step aside. I know from expereince. In my own case, owning 13 Westaff and Remedy staffing offices, I could have worked for several more years. My wife retired from our business in 2009 to care for her elderly mother. We had had a succession plan available. I cut my work days down to 3 per week in 2010 but it was not the same without someone I had worked with for nearly 30 years. It was also a good time to execute the plan we had before my delaying became a demotivator. So, at the end of 2010, the plan was executed and I sold all of my shares.
3. The branches you want for yourself and your sister may not be enough to give you the income you want. With 13 offices, some are "wildly" successful and some are only mildly so. Some of the smaller offices might not be able to generate a sufficient income for an entrepreneur but are adequate to cover the income of a manager. The offices are also synergistic - there is one in Claremont, NH and one in Lebanon. There is one in Albany and one in Saratoga. Maybe your dad is worried about synergy.
Thank you for the reply professor it is helpful