Every year or so we try to remind our readers to get serious about succession. In our experience, wholesalers range from completely unprepared to having a full-on plan that has every step planned in minute detail. (Down to the type of mints or booze to be served at the owner’s wake.)

Regardless of where you are in the continuum, it would be prudent to review the plan again if you have not done so in the recent past. Why?

• Stuff happens — The assumptions that were the basis for you planning often change or evolve. Sometimes the assumptions were wrong. So when the foundation of your plan is bad, you need to get it fixed…fast.

• People change — Ten years ago, the person that you had listed as the next president was 55. Now he is 65 and there is a good chance he is no longer all that interested in the rigors of the job. Health issues arise, people climb on the wagon and fall off the wagon and family issues present themselves as time passes.

Years ago Rich was doing a consulting assignment for a company regarding their organization and asked to see their succession plan. They had not pulled it out in years and were surprised to be reminded that several of the key players of their future could no longer be considered key players. One had passed away suddenly and the other was in a brutal fight with cancer. It was a sad discovery at the time but it would have been much sadder if they had discovered it after the owner had been taken out of the picture by surprise.

• You are smarter now than you were when you developed the plan — OK, some of us are no better and some may have lost ground due to a misspent youth in the 70s (or 90s). In general though, situations tend to clarify as time progresses. The players opt in and opt out. The competitive climate evolves. The aggressive independent down the street was acquired by a lazy national and most of the hard-chargers on their team are sitting on a beach in Florida. A person who was a new employee, several years ago and not on the radar has now stepped up and is ready to assume significant responsibilities in the company. There is no way that she would have been considered in the past planning simply because there was no history.

• Most of the plans, when reviewed carefully, still have gaping holes in them — Another pass over the plan may expose the holes so as to prompt work to address the hole.

Here’s your starter checklist for the review:

• Do you have the proper legal team? — Just like doctors, the attorney who was right choice 5 years ago may not be the best choice today. Also, it would be good to determine whether the size and makeup of the firm still fits your needs. Legal firms have succession plans also and it is proper for you to know where they are going in order to decide whether they have what you will need going forward. Since the tax and inheritance laws continue to be a political football, having a firm with strength in these areas is critical. (Note: on the personal side, now is a good time to look at your medical support team to review whether they are still the right team for you. If your doc still treats you with leeches you may want to look around. Oops! Apparently, leeches are still used in some modern treatments and eating eggs is ok.)

• Do you have the proper accounting team? — See above.

• Who ya gonna call? — If you find yourself dealing with a demonic spirit, you would call Ghost Busters. If the owner or president gets hit by a bus, a run-away golf cart or squashed by a bull in Pamplona, what is your first move? Do you have a go-to person to call? There are legal and operational details that must be addressed, in some cases, before the owner has been buried. In most cases, your go-to person is not your banker, lawyer or accountant. While they need to be contacted, they seldom possess the operational experience and detailed understanding of the business to handle the next 30 days.

• Basic operation must be on autopilot — Some plans are very specific regarding the high-level details but when it comes to the realities of who handles payroll and who signs the checks, there is no viable plan. Often these operational plans do not cover the possibility that several key executives get hit by the same bus. If you ask the key executives whether they ever travel together the answer is almost always, yes! Some companies have policies that require key executives to travel on separate airline flights. We find it funny that those companies don’t also prohibit traveling in the same car, boat, jet-ski or ATV all of which have much higher accident rates than commercial airlines.

• If the next generation is family, prepare them for their intended roles — Over the years we have talked with owners who came into their leader role less than prepared for that role.

Sometimes Dad or Mom didn’t adhere to their part of the plan.  They got sick, hit by that bus or just got tired of it and bailed out leaving the next generation to deal with the situation as best they could.  The criterion:

a. Respect for the other stakeholders — these include other members of the team at all levels, the suppliers and the customers.  Few businesses have flourished when the owner treated the people around them like crap.

b. To paraphrase Yogi Bera: 90% of the time, being there is half the battle — spending a lot of time away from the office, other than visiting customers, sends a clear (negative) message to the team.  

• The country club is not the classroom for distribution — Frankly, some families pamper their kids for their first 21 years then somehow magically expect the kids to be able to run the business and to have picked up a work ethic at the country club sitting by the pool.  Seldom does the country-club style training program result in good distribution leaders.  Don’t get me wrong, we have nothing against enjoying the rewards from the hard work involved in building a successful business.  Some kids get confused and think that the heavy lifting is done on the tennis court, golf course or 19th hole.  If the kids have never experienced the struggles of operating the business, they have not been prepared to continue the fight going forward.

• Are you building a strong bench? — Just like a football team, you need great players at all positions and you need great subs for when the 1st string can’t play.  Many companies know who will assume the top positions but when they move up, who will fill their positions.  When the son and daughter move into the lead role, they need a strong team under them.

• The 2-years too late rule of thumb — Years ago, while we were dealing with some family issues (regarding Joe Sr.), a doctor mentioned that most seniors wait 2-years too long to make some of their critical decisions.  For example, they should be planning to move into a care facility but resist the move.  Their family, wanting to ease the transition, just allows them to delay the move.  The doctor indicated that this often results in the transition being made under duress.  The person gets sick or takes a fall that forces some immediate changes.  So the process is not a gentle, gradual process, it is abrupt, unpleasant and brutal.  Often the stress of this sudden change results in other health issues that might not have presented themselves, had the process been started 2 years earlier.  We see a corollary in the business transition process.  The next generation gets going 2 years too late.  The senior generation stays 2 years too long.  

• Train your next generation in someone else’s business — If the owners have a good friend in the industry, or maybe a real good friend…possible a person whose life they have saved, they may want to ask that person to hire their son or daughter to gain industry experience in another market (I never had this opportunity. I guess Dad hasn’t saved anyone’s life.). They can intern with that company to learn the ropes and make the stupid mistakes that we all make along the way outside the view of the team they will be leading.  Ideally this is not a management job, rather a role that allows them to understand the inner-workings of a wholesale business. They need to learn that a closet flange is not installed in a coat closet and that a street 45 is not speed limit.  They also get the experience of working in a different environment and thus have a 2nd perspective to bring to the table.  

• This is serious stuff, so don’t treat the topic casually — We begin this topic with a fond memory where Rich was having a similar discussion with an owner who said, “Remember stud, it’s my f-ing company.”  We acknowledge, it is the owner’s right to do pretty much whatever he or she wants with the company (within the law).  We also know that most owners know their businesses more intimately than anyone else.  
With all this as a preamble, we see some owners winding down their careers by turning the businesses into the wholesaler version of a “hobby farm.”  That’s where they “putter” around in the business.  Make no mistake, this is not benign.  This sends a clear and negative message to the team that the company is on a path…downward.

Rich was talking to the employee of one of these businesses and she was resigned to the situation.  For personal reasons, she was not moving on but the picture that she painted was disheartening, “The owner comes in most days, stays until noon then goes off to do something else.  He gets partly involved in business situations…just enough to mess them up but not enough to actually help.  He doesn’t want to spend money on anything…probably no money to spend.  That new guy we had in sales only stayed 4 months so we are sort of looking for a new person there.  Don’t get me wrong, I love the guy but the business will continue down until he passes.  Hopefully, someone who cares will buy it.”

So that’s your starter list.  Get going.