Rudy Epp, owner, Rudy’s Auto Service in Winnipeg, Manitoba, Canada, was an employee of his father’s shop for 18 years. Then, just before the shop celebrated its 40th anniversary, his father passed away.
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While he had relationships with the banker, suppliers and customers, he did not have a succession plan in place. Epp had to learn quickly, with what calls a “steep and stressful” learning curve. Epp shared his story as the group Underpressure from the University of the Aftermarket Leadership 2.0 presented information on succession planning at the Global Automotive Aftermarket Symposium.
There was no strategy, no estate plans and no guidance as to how Epp should take over the business. Epp along with Courtney Carbone, director of member services AAIA; Steve Chetwood, major accounts manager – NAPA West, NGK Spark Plugs; Adam Lee, president, operations, Lang Distributing Inc.; and Sean Tucker, national account manager, Accessories Marketing Inc., shared how to create a succession plan.
Only 27 percent of business owners have an exit plan, and less than 5 percent of automotive aftermarket businesses have a succession plan. Succession planning, or exit planning, includes formal agreements among business associates, family members and key employees for the continuation or sale of a business.
To you that can mean anything from retirement to providing for the future, cash for other endeavors or a timeline for exit. Once you determine what your exit is, find who you want to sell to (family or third party) and if anyone would want to buy your business.
Put together the plan and gather resources from professionals, including lawyers and accountants. Once written, share with family members, key employees and others you feel should know the plan’s details.
While you’re working on the plan, don’t assume your family wants to take over the business. The group notes that the sale of a successful business to an outside buyer is better for the family than having a family member who is not interested take it over.
Only one-third of family business successfully transfer to the second generation, and only 13 percent to a third generation. There is something to selling outside the family, as there is a higher value there and you can avoid any potential acrimony from those not chosen or problems from those who change their mind and feel they deserve something down the line.
Aside from your family and life, succession planning also protects the industry as a whole. The supply chain, which drives the industry, runs from the consumer, to the technician, parts store, warehouse distributor and manufacturer.
And when the supply chain breaks down, the consumer is the hardest one hit, thus losing faith in independent shops. This lack of trust starts a ripple effect back up the chain. Keeping your shop running successfully – or any business throughout the chain – can keep things steady throughout the supply chain and industry.
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