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Succession planning is weighty matter for business owners

Management, Markets | June 1, 2013 | By:

Both younger and older generations face unique challenges in succession planning.

Michele Quadri, owner of Al’s Awning Shop Inc. in Erie, Pa., grew up in the family business and dreamed of working alongside her father one day. But it was not to be; he died when she was a teenager, and she ended up running the business without him (see a membership profile of Quadri). Now Quadri brings her 13-year-old daughter to work as often as she can. “I want her to see the joy that I had growing up here,” she says. “I want to teach her in the same fashion that I was taught.”

As much as Quadri wants Al’s Awning to be in the family for generations to come, she affirms her daughter’s right to choose.

“She may choose that it’s not her path,” she says. “If it’s not meant to be, you need to be honest with yourself. That is very difficult sometimes in these family businesses. If you can honestly say you don’t like coming to work every day, you had better find something else. Luckily, I love it.”

For every member of the younger generation who’s glad to take over the family business, there is one who finds that the path leads elsewhere. Ken Robinson, chairman at Engineered Textile Products Inc., Mobile, Ala., saw it happen when he was growing up. His uncle came to work for his grandfather, but after about 10 years, it wasn’t working for either one of them, and the uncle had to leave.

Assuming the scions of the family want to stay, they also need to define their roles. Not everyone is good at every part of running a business; Quadri freely admits there are tasks she’s not good at, which she delegates to her employees. Nick Olsen, shop manager at Katie Bradford’s business Custom Marine Canvas, Noank, Conn., has established himself as an excellent fabricator but finds the idea of being responsible for the bills, the suppliers, and the paychecks of five or six employees daunting.

Sometimes it sorts itself out. The three Hunzinger sons who comprise the fifth generation at Evanston Awning Co., Evanston, Ill., have neatly divvied up their work according to their talents. Artistic Aaron is a jack-of-all-trades, while tech-school-educated Daryl designs projects and business-savvy Eric crunches numbers in the office.

“My two older brothers and I, we all do different things in the company, but it’s all stuff that we’ve kind of latched onto, that we started doing when we were younger,” says Aaron. “I sell awnings, I can make awnings, I can sew the fabric, I can install the awning. Our talents make it so we can make a really good awning product. We cover all the bases.”

Negating nepotism

One of the greatest worries of many young fabricators is that other employees will think they’ve been given unfair advantages. Unfortunately, sometimes that’s true. One fabricator, who asked not to be named, says she’s worried about an up-and-coming family member in her organization, who acts entitled and won’t do bottom-rung jobs.

“When it’s just assumed that someone is going to be part of the ownership, what do you do if you get a slacker?” she sighs.

Quadri can answer that. She says she had to fire her own sister because she “took advantage of the situation.” And the same was true of her brother. So Quadri herself does everything she can to show that she’s earned her position.

“You just have to prove yourself,” she says. “I have an employee who’s been with the awning shop for 30 years, and he has the utmost respect for me, but there was a point when I learned from him. I watched him and I’d go out on the job with him. Now we learn from each other. He’s 15 years older than me, and yet our working relationship now is where I’m his boss. Similarly, my daughter will have to decide what her craft is and then focus on it and prove herself.”

Olsen says he’s taken some ribbing during the 10 years he’s worked at Custom Marine Canvas. At 30, he’s a generation younger than anyone else there, but he’s worked his way up to the position of shop manager. “There was a lot of resentment toward me in the beginning,” he says. “You know, who is this kid coming in? Oh, he only got the job because he’s the owner’s cousin. There were some cries of nepotism I had to deal with.”

Olsen is quick to add, however, that it’s not as though he had to overcome any great amount of adversity. He simply worked doggedly, often after clocking out for the evening, to learn the trade.

“I started making covers for everything in the shop, and then I started making duffel bags, and got to the point where she would allow me to work on customers’ work,” he says. “Being the new guy and being a fresh set of hands in the beginning, you go as the assistant. You’re the guy who has to carry the stuff, and you help do the patterning. Trying to prove myself, trying to prove that I can do this, doing things on my own so that I can show what I can do, has been part of the struggle and part of the reward, too.”

Mapping the future

Even though Olsen has risen through the company and has committed to the shop for the long term, he and Bradford haven’t set out a formal succession plan. Part of the reason is that they’re just not ready to broach the topic.

“I don’t know what her plan is for her retirement,” he says. “Does she want to stick around the area? Does she want to take a lesser role in the company? Does she want to still be the boss but I take care of day-to-day operations? There’s a lot that goes into it.”

But the other, more compelling reason is that he can’t figure out exactly how he could move out of his current role. The shop hasn’t been able to find any younger trainees who are willing to work for what they can afford to pay, and his fellow employees will retire before he does, so any upward move he made would create a void. How could he travel to shows and be involved in the industry like Bradford, when there would be no one available to fill his shoes back home?

“The reason she’s out there doing that is because she has good people like me and my other coworkers here, who can continue to keep the money rolling in when she’s doing the public aspect of the job,” he says. “If I then decided to step into that role and had to do all the things that she does to keep the Custom Marine Canvas brand going, then not only do I have to replace any employees who decide to leave and/or retire, but then I have to replace myself. So how does that transition happen?”

Quadri may face similar questions. When she was growing up, Al’s Awning Shop was chock-full of family: her father, her uncle, her grandparents, three of her great-aunts, two of her great-uncles, and a couple of cousins. But now she manages 12 employees, none of whom is a family member. The closest is her business partner, whose father worked at the shop for 50 years and started at age 14. He’s 49 now, several years older than she is.

She says the key to her succession plan is training her kids while they’re young. But how will she eventually replace herself if the family succession doesn’t work out? It’ll come down to treating other people like family as well.

“When it comes to our other employees, I build a relationship with them based on their talents and gifts,” she says. “I take the time to teach them and to train them, but yet to give them the opportunity to grow in the business with me and to teach me things. If they have a new way that they want to try to do something, I’m always open to the ideas.”

Jamie Swedberg is a freelance writer and editor based near Athens, Ga.

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