A 90’s thriving business is not a guarantee of a millenial business success.
A medical widget supplier did a wonderful job of starting a vendor business of medical devices. After all, he had formerly been a user and installer of these products himself; he saw the need for a supplier to furnish these devices locally. So, he started his own business.
From the start, the demand and need was validated. Business got off to a fast start and the pace never slowed. Hiring became essential and a growth from 2 to 10 employees happened quickly. With the growth came a good reputation and recognition in the business. Deliveries were timely, products had quality and receivables were worked out with all customers. If a customer needed a little extra time, he got it. The company participated in trade shows, professional organizations and donated generously to non-profits.
Of the employees, one was the owner’s son. He had come on board to help out and ended up staying. His place was at the counter for sales. He had not gotten that position because of his personality. The other employees worked around him to maintain satisfied customers. The time came to hire an outside sales representative to seek new accounts. The new representative was experienced in the field and was able to make technical referrals to the customers. In the 80’s and 90’s the business flourished. In the late 80’s, the owner and founder of the business died unexpectedly. The family was devastated and the employees were left wondering “what next?” Customers paid their respects but expected no changes in service.
The family grieved but with the support of a few key employees, was able to pull it all together to keep going. The founder’s wife came into the company as a bookkeeper/controller to keep track of the financial aspects. As the economy recovered from the recession of the early 90’s, business grew. The outside sales representative was promoted to president of the company since neither the son nor the wife were viable figureheads for the leadership role. Another outside sale representative was hired. A side consulting business was formed that would make recommendations to clients for specific products to use in special cases. The consulting business returned higher profits which in turn boosted the company bottom line.
A few obstacles were encountered. There had never been a succession plan, after all the owner was not that old. He had not spent any time grooming anyone to take over. The son, who was not ambitious to begin with, was not a likely successor. The wife was not technically knowledgeable of the products and was not interested in leading or managing employees. She was not one to move the company forward. The newly named president had limited power. He had no control over the finances which left him responsible for overseeing employees and customers. Through all this, the company moved forward without much being said. Employees were in the dark.
By the mid 90’s, the wife was in her 70’s and her energy level was diminishing. The concept of growth did not interest her as she preferred keeping things simple and easy. Her work days soon became ½ days and part of those was napping at her desk. The wife died and left everything to the son who didn’t have a clue about what to do.
The company became lethargic and attitudes took a nose dive. Inventory shrunk and product availability grew sparse. Employees began seeking other jobs and when business became anemic, he decided to find a buyer. The timing couldn’t have been worse. Another recession had started and the value of the company dropped. He wanted out so bad, he took the first marginal offer that came his way and sold. The company sold for roughly half of what it had been worth at one time and with inaccurate inventory data, he was left with nothing at the end.
Succession planning is essential. Whether the transfer is to a family member, an employee or outside parties, maintaining the value and growing the value of a company are essential to survival in today’s business world. Customers look for continuous improvement, employees look for continued stability and successors look for an opportunity. The strategy of continuance is one that can be worked on daily for short term and long term success.
Leading Edge Business Strategies, LLC is a consulting firm for small business. Paul Beaudette is the President and has over 30 years of successful business experience managing companies to sustainable profits and leading employees to productivity and efficiency resulting in growth and profits.
Contact us at firstname.lastname@example.org