If you've spent years building a successful business, handing it off to a new owner someday surely seems scary - even if it's to your own kid or longtime wingman. Similarly, in the shorter term, the thought of your rock-star general manager leaving likely makes you sweat. Transitions like these are monumental, for sure, and rarely are they seamless. That's why the more effort you put into succession planning now, the fewer headaches you'll have later, and the better you'll set up your beloved business for future success.
Store owner: Michael Kanter, cofounder and chief visionary officer, Cambridge Naturals
Start planning early. When it comes to transferring your store, succession planning is like saving for retirement - it's never too early to start. If this is just a business to you, maybe it isn't so critical. But if your business has merit and you'd like to see it continue with the same purpose, you have to think long-term. If you don't, you could get caught short when the time hits. Maybe you'll suddenly
burn out or your partner will have a serious health issue? You just never know at what point you'll feel like owning a store is too much.
Make it official. Even if you're keeping the store within your family, you have to formalize things. The discussions can begin informally, but as you go along, document everything, meet with your accountant so he or she knows what's happening, and work with a lawyer to hammer out legal responsibilities going forward. If you don't go through these formalities, you could put yourself - and the business you've built - in a precarious position.
Remember, this is business. For my wife and me, one of the most challenging things about transitioning the store over to our daughter has been stepping back as parents. Because beyond the business relationship, there are emotional bonds and love. If Emily is tired during the workday, I can't tell her to go home and rest like I'd want to as her dad. As an owner, I have to think, too bad, she has to be here, step up her game and work through it. This has been hard for us to get past, but in order for this transition to work, you have to.
Retail consultant: Bill Crawford, founder and principal consultant, Crawford Solutions
Don't jump ship too soon. The first thing I tell retailers looking to hand over their stores is to be sure you're really, truly ready for this transition. There's a lot permanency in this. And if you give away the reins and then try to take them back, it doesn't end up well, especially when dealing with family. Do you have friends, a good relationship with your spouse, causes to support and hobbies to keep you busy? Make sure, because this decision isn't like water that you can freeze and thaw - it's more like a cake that you can't unbake.
Pick an appropriate successor. Be fully confident in who you turn your store over to. In many transactions, the new owner makes payments to the old owner. Perhaps the sale is part of your retirement funds until the business is paid off. Well, what happens if the new owner runs off a cliff and drains your retirement? It would be pretty rough if your nephew torpedoed your business and you had to go back to work at 70. Don't just pick someone you like; select someone with business acumen, personality and drive.
Prep the next generation. Even if a potential future owner feels confident, is she ready? Make sure, especially if she's family, because she might think, My uncle founded this store, my mom ran it, so I automatically know what to do. Nope. She might be totally unaware of all the work and pressure involved because her older relatives handled it so well. The best second-generation owners are those who were made to unload trucks, sweep floors, run registers and rotate the dairy cases and then worked through the ranks.
Retailer: Lynn Ellen Schimoler, assistant director of retail operations, City Market, Onion River Co-op
Establish clear hiring processes. An important part of succession planning is hammering out the nuts and bolts of every job description. And you can't just post a job opening in the newspaper. An interested employee may see it and not have known it was available. Or perhaps an employee knows a shift leader is resigning and wants that job. That can't happen in a vacuum, so there needs to be a process. We post openings on our internal job board for a few days before advertising them outside of the business.
Get all employees invested. We have an organizational chart, which lets employees know their place at the table in our business and sets them up for future success. So, for instance, if someone who works in grocery wants to work in community engagement, they already have an idea of what that job entails. Also, we make sure our entire staff knows the fabric of our co-op. When you share openly about how your organization functions, you get high-performing, engaged employees who want to stay and move up.
Dial in training. A big piece of setting everybody up for success is developing employees from the beginning. We might train them to cut a sandwich a certain way, then begin teaching them how to cost out ingredients. Over time, a sandwich maker understands not only portions and good customer service, but also margins and why we source bread locally, which ties directly back to our mission statement. All of these pieces start clicking, and you get nimble employees who can move across departments more easily.