Planning is key to longevity for auction businesses

mccurdy

A lack of preparation and honest communication can often keep a family business from moving forward from one generation to the next, says Greg McCann, founder of McCann & Associates, Deland, Fla.

Although it might seem daunting, the planning required to properly transition a business doesn’t take much time, he says.

“Thirty years of hard work on our business, and for the lack of 10 hours of planning it all goes south,” says McCann, referring to a dire scenario family businesses can experience.

“People tend not to equate the payoff for a little bit of planning.”

But when small business owners are faced with the potential consequences of poor planning, they realize the importance of estate plans, wills and well-communicated transition procedures.

“No one I’ve ever worked with has said, ‘I want to do no planning, and when I die let them fight it out,’” McCann says. “So, as you talk through what a lack of planning means and the consequences, almost everyone agrees they should plan.”

For a smooth transition of a family business, McCann offers this advice:

1) Families should consider using transition professionals

who, unlike estate planners and attorneys, take into account the effect succession could have on every family member. “A lot of family businesses plan, but their advisers don’t see the ‘family business’ as a ‘family business,’ they merely see it as a business,” he says.

who, unlike estate planners and attorneys, take into account the effect succession could have on every family member. “A lot of family businesses plan, but their advisers don’t see the ‘family business’ as a ‘family business,’ they merely see it as a business,” he says.

2) Business founders or principals should understand that the processes they put in place

during a transition are paramount, especially when it comes to potential family conflicts. “Most families will accept most decisions if the process is fair,” he says. “But if dad or mom researches something, thinks they have the perfect answer and just sort of slides it under the door so to speak … (family members) are left to speculate, they’ll make assumptions.” Family members who don’t feel they have received what they deserve from the family business might believe their parents are disappointed with their personal decisions or opinions, when in fact this could be far from the truth.

3) Family members should view a founder’s or principal’s transition out of the business as difficult,

as in some cases the company is part of that person’s identity. Therefore, they should consider ways the founder can maintain a role within the company, even if that means coming into the office on a limited basis.

4) In today’s day and age, it might be a good idea to handle business decisions more professionally. Sometimes, McCann says, families do things over the dinner table; however, as families and companies grow, “You can’t keep doing everything informally,” he says.

For more auction business succession tips, read the April issue of Auctioneer magazine, the official publication of the National Auctioneers Association.

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Filed under Auction Industry, Auctioneer magazine, NAA Members

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