According to a recent poll¹ of small-business owners, 24% have a succession plan for their retirement.

When asked about how the business would be handled at the time of retirement:

·         23% of the owners said they would simply close the business

·         20% of the owners said they would sell the business to a 3^rd party

·         18% expected to transfer the business to a member of the family

·         12% said the business would be sold to a partner or employee

·         27% were not sure what would happen to the business 

It seems that 3-out-of-4 owners of small businesses either (1) see no need to set a succession plan or (2) see a need for a succession plan but don’t get around to creating it. About 1-out-of-4 owners intend to simply close the business so they do not see much need for a succession plan. About 1-out-of-4 owners don’t know what would happen to the business…apparently they can tolerate the ambiguity. The remaining 2-out-of-4 owners – 50% of owners – anticipate the formal transfer of their business either to a 3^rd party, a family member, a partner, or an employee.

Putting this into a few perspectives:

 ·         For employees of small businesses: If you work at a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer. 

 ·         For clients of small businesses: If you buy products or services from a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer. 

 ·         For suppliers to small businesses: If you sell products or services to a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer.  

Footnote:

1.    TD Waterhouse’s early October 2011 Business Succession Poll of 609 small business owners

"To Gift or Not To Gift", that was the question...at CFFB's March breakfast.

At our breakfast event, Tom Deans explained why gifting a family business is generally not the best course of action. And Grant Robinson, of event sponsor BDO, provided some opposing thoughts...creating a friendly debate on the topic of family-business transition, succession, and exit.

Tom described himself as a contrarian who tends to challenge people. He has owned and operated a family business. And he explained, he sold it at the right time and at the right price. He planned ahead. He spent the better part of 5 years 'working his plan', then he sold his family business.  Tom Deans has entrepreneurship in his blood. His great grandfather ran an East Coast tire distribution business. His grandfather was a chemist, who founded what became a $100,000,000 publicly-traded enterprise. Tom's father created a plastics business, the largest employer in Orangeville. 

Tom's ancestors never, ever 'gifted' their businesses...they sold them!

Tom recommended all owners of family businesses consider that option: rather than gift family businesses to relatives, sell the family business. That's the gist of Tom's message to the owners of family businesses. In his book, 'Every Family's Business', Tom provides 12 important questions...designed to help families consider the best course of action for business 'transition or exit'.

Quoting Tom, "I am offering, in a way, permission for business owners to take care of themselves."

Tom understands the feelings of guilt family business owners can experience when they think about selling their businesses. He cautions, those feelings are often followed by business failure. The fact is most family businesses do not survive for generations. For a family business to survive for generations, each generation must sacrifice something...just as the founder did before them. Gifting the business to the next generation often results in business failure and loss of the wealth that existed in the business and the family before the gifting. 

Tom explained...

"This issue is very important in Canada because we have never had so many aging business owners."

"Banks are doing due diligence on how well prepared family businesses are for transition."

Summing up Tom Deans' contrarian view, using his words:

• "A family business is a set of ideas and values that you pass on to your kids."
• "Pursue the longevity of wealth and family...but not the business itself."
• "Teach your children to love commerce: to love business...not to love a business."

As soon as you enter the offices of Menno S. Martin Contractor Limited, you will notice it is a comfortable place. That was my first impression, the first time I visited.

As you get to know the people at Menno S. Martin you will learn about the fabric of their business, as woven by their founder 70 years ago. The fabric consists of: forethought, fair deals, hard work, mastery, loyalty…and stories.

Founder Menno S. Martin is remembered with fondness. The fabric of Menno’s values, his character, and his business lives on. His sayings and stories are retold with fondness and admiration. Menno S. Martin created a business where people want to work. Several people have worked there for over 25 years.

Here is a Menno S. Martin picture that is worth much more than a thousand words.

I was touched and impressed when Laverne Brubacher gave a copy of this picture to me. I was touched because this document from the early days of the company is clearly a special gift. The original and copies are proudly displayed in the offices at Menno S. Martin. I was impressed because this picture illustrates the best of strategic planning: a single page, chock full of Vision, Mission, Values...and communication.

Clearly, Menno S. Martin practiced principle-based leadership. Quoting Laverne, “Three things were important to Menno: his faith, his family, and his business – in that order”. The above picture illustrates that and it links everyone at Menno S. Martin to the founder they honour.

Menno S. Martin passed in 2005. His legacy of work and leadership lives on.

“Family is first.”

That quote captures a big part of Menno’s wisdom and legacy. It applies to the people who work at the company. It applies to the people who do business with them. The people at Menno S. Martin incorporate ‘family is first’ when they do projects for their clients. If you check out the testimonials at the company website then you will see ‘family is first’.

Loyalty – that’s a word both Laverne Brubacher and Art Janzen used several times when they spoke about their business.

Laverne joined Menno S. Martin on his 21^st birthday in 1965. Menno trusted Laverne enough to offer him shares of the company in 1968. The trust and loyalty between these two men remained solid throughout the rest of the time they worked together. Laverne took over from Menno in 1976 and Menno retired in the early ‘80s. However, Menno was a regular visitor at the offices long after he retired.

Laverne and Menno had a very special relationship. The men shared values: forethought, fair deals, hard work, mastery, and loyalty. In addition, Laverne was a willing student of business and Menno was a willing teacher of business.

This mentoring of business know-how is a key facet of Menno S. Martin’s success story.

Laverne talks about Menno, “Menno had a built in sense of business ethics. Honesty, care, loyalty, trust – all came naturally to him. He was an entrepreneur – and he seemed to come by that naturally. His quiet enthusiasm was contagious.”

And, Laverne has shared his education with another generation of Menno S. Martin leaders, Art Janzen and Trent Bauman. He shared the key lesson - 'treat your people well and they will be loyal'.

In anticipation of his retirement, Laverne led a thorough transition planning and implementation exercise, which included selling his shares to Art and Trent...over a comfortable period of time. Now, Laverne has eased out of his operating role and Art and Trent run the business.

And now, like Menno before him, Laverne stills shares his time and expertise, at the office, with the fellows he mentored.

Laverne, Art, and Trent have kept alive the legacy of Menno S. Martin’s business leadership - covering the important things like Vision, Mission, and Values. To these things each of them has added a personal touch…personal talents and strengths.

This allowed smooth transition to a new generation of owner-leaders.

From Menno

To Laverne

To Trent and Art

Smooth transition of ownership – well, that’s good for all involved: it is good for families, owners, employees, clients, allies, and community.

That’s the Menno S. Martin legacy.

A Family Business - Well Done!