L-R: Me, my brother's son, my brother, and my father
Succession plans are never easy. But if you own an offsite construction business—or any family business, for that matter—I can tell you from personal experience that things rarely go exactly the way you planned. My father, my brother, and I once owned a chain of grocery stores together. My father founded the company with my brother, and I joined ownership as a graduation present from high school. For years everything ran smoothly, at least on the surface.
Then my father passed away unexpectedly. My brother became President of the corporation and I stepped in as Vice President, and that’s when we discovered something neither of us had anticipated. We both had very different visions for how the company should be run—visions that didn’t really match the one our father had quietly carried in his own mind.
Six years later, after many discussions and more than a few disagreements, we made the difficult decision to sell all 17 stores to a competitor. My father had never imagined he would pass away so soon, and like many founders, he never created a structured succession plan. Too bad. If he had, I might still be in the grocery business today.
The Quiet Risk Many Owners Ignore
A recent survey revealed something that should make every business owner pause for a moment. More than half of business owners over the age of 54 have no succession plan at all. Even more surprising, roughly 75% do not carry Keyman insurance, a simple financial safeguard designed to protect a company if a critical leader suddenly passes away.
Many small corporations rarely hold formal board meetings, which means there are no corporate minutes documenting decisions or long-term strategies. And perhaps most telling of all, a large percentage of owners either don’t have children interested in the business—or their children have built careers elsewhere and don’t want to inherit the responsibility.
In other words, the assumption that “the family will figure it out” is often just that—an assumption.
What Usually Happens Next
My family business lasted six years after my father died. Looking back, that’s actually longer than many similar companies manage.
Industry data suggests that businesses without a clear succession plan often struggle to remain intact as the original company for more than three years after the founder is gone. Disagreements arise, leadership gaps appear, and sometimes the simplest path forward becomes selling the company altogether.
It doesn’t really matter whether the business is grocery stores, manufacturing, construction, or offsite housing. The pattern shows up across industries.
Where Offsite Construction Businesses Are Especially Vulnerable
In the offsite construction industry, succession can be even more complicated.
Many factories and related businesses are built around the personality and experience of the founder. They know the builders personally. They understand the production process instinctively. They hold the relationships with lenders, inspectors, and developers.
When that one person suddenly disappears from the equation, the company can lose more than leadership—it can lose its institutional memory.
Some Basic Steps to Begin a Succession Plan
The good news is that succession planning doesn’t have to be overwhelming. It simply requires starting the conversation earlier than most owners feel comfortable doing.
Begin by documenting leadership roles.
Define who will run the company if the founder retires or passes away, even temporarily.
Create formal corporate structure.
Hold board meetings, keep minutes, and establish governance procedures so decisions aren’t left to guesswork.
Consider Keyman insurance.
It’s one of the simplest financial tools to protect the company during a leadership transition.
Develop leadership inside the company.
If the next generation isn’t interested, train managers who understand the culture and operations.
Talk about it openly with family members.
Silence and assumptions have destroyed more family businesses than poor financial performance ever did.
Modcoach Observation
Most founders spend decades building a business but only a few hours thinking about what happens after they’re gone. The uncomfortable truth is that succession planning isn’t about preparing for death—it’s about protecting everything you worked so hard to create.
If you own an offsite construction company today, the best time to start that plan isn’t next year or when you turn 70.
It’s today.
Comments
Post a Comment