A successful business not only survives the natural ebbs and flows of time but can even thrive on change.
Times of transition, when ownership and leadership are transferred, can be one of the most challenging periods for a company. From a direct seller-buyer transaction to management buyout to family succession, there are ways to successfully pass on the torch — if a clear plan and strategy is in place for the transition.
A survey released by the Business Development Bank of Canada earlier this fall indicates that 4 out of 10 small and mid-sized business owners in British Columbia plan to exit in the next five years but many are not prepared for the transition.
Unlocking wealth
David Tyldesley, the co-founder of The Business Transitions Forum, has worked with businesses in different industries for twenty years.
“We were really surprised by how many people don’t have a plan in place and don’t really know where to start,” Tyldesley said.
Almost 60 percent of business owners are 50 years old or over, the BDC survey found, and the coming wave of retirements will create a boom in business transitions. More than a quarter of these will be family successions from one generation to the next.
Family succession, however, presents a unique set of challenges and risks.
“It’s very different when you are dealing with a family business,” Tyldesley said. “You’re dealing with a lot of emotions, family ties, and some very sensitive discussions.”
Beautiful dance or awkward handshake
Travis Klassen and Erin (Klassen) Parkes, both members of the executive team for Valley Carriers, know first-hand the trials of a family transition. Their grandfather started the pulp and sawdust company more than 50 years ago.
For the last few years, the business has been run by the third generation of Klassens.
“Most of us grew up in the company, working part-time in the yard, but the transition was challenging,” Klassen said. “When you are doing a succession plan, you have a combination of a long, slow beautiful dance and a long, awkward sweaty handshake.”
Erin (Klassen) Parkes
Communication and planning were key, Klassen and Parkes agreed and found it helpful to learn from others who had been through a similar experience.
“Family meetings are the biggest help because you get to sit down with people who are all in different stages of the process and it normalizes the stress and the fear,” Klassen said.
Klassen and Parkes are already thinking about how to best prepare for the next family succession, even though that might not be for another couple decades down the line.
“We are still learning the dance,” Parkes said.
Seeking success
One of the major ways of ‘learning the dance’ is through events with other businesses owners and experts in the industry.
Tyldesley produces the annual Business Transitions Forum, co-founded with business partner Mark Stephenson, and hosts the business networking and expertise-sharing conference in major cities across Canada.
“It is really resonating with the marketplace,” he said. “One of the obvious reasons is demographics with the aging population of the baby boomer generation.”
But it’s not just baby boomers looking to sell who attend, he said. A large percentage of the attendees have no immediate plans to sell but are looking for information about increasing the value of their business.
“Even if they aren’t planning to sell anytime in the near future, it’s worth discussing building value,” he said. “A key concept is making your business sellable – it doesn’t mean that you are trying to sell it, but a sellable business is a more valuable business.”
The conference brings together more than 300 people interested in the topic from business owners in different industries to advisors and transition experts to investors.
The "3rd Annual" Business Transitions Forum is being held at the Westin Bayshore in Vancouver on November 15, 2017. Tickets are available online. Early bird tickets are available until October 18.
