Survey respondents address family role
Employee retention was the top issue of succession concern in the latest survey of Boating Industry print and digital subscribers, conducted by email in mid-October.
Respondents were a mix of boat dealers, manufacturers, marina owners, industry suppliers and others working in the industry.
Seventy-three percent of surveyed business owners who completed a transition or ownership change found the process very successful.
“We transitioned to a privately held company in the depths of the great recession and with the support of the owners have grown the business each and every year since,” said one Florida-based survey respondent.
Other survey respondents’ indicated they sold business assets in preparation for retirement, while others sold to a business partner or turned operations over to one or more family members.
For others, restructuring their business and transforming it to resemble a modern marine facility had a positive impact on post-transition business.
Survey respondents concerns about exercising an exit strategy were varied, ranging from finding the right person or company to waiting too long to initiate the process.
“I started to work on a transition to late in my business life,” stated another survey respondent in Delaware. “Now, I don’t have as many options as I would have had if I started sooner.”
Proper valuation of the business, maximizing price, liquidating inventory or certain assets, and the future business role of current family members were other concerns stated by Boating Industry survey respondents.
Forty-one percent of readers reported having a current plan in place, which puts the industry well ahead of most family-owned small businesses.
According to last year’s Family Business Survey from PwC, only 23 percent of family firms have a succession plan in place.
Fifty-seven percent of the companies surveyed in October by Boating Industry are planning an ownership transition in the next one to five years.
Future direction dilemmas
Respondents expressed continued concerns about who the future owners of their business will be, and how family members would fit into the succession mix.
Maximizing profitability while maintaining the long-term success of the business, retaining valued current employees, and finding qualified new workers were additional survey concerns.
There is also concern about maintaining existing standards for customer service, and market changes and continued consolidation within throughout the industry.
Of those companies that do have an exit strategy, almost half are planning to transition the business to a family member or employee – 35 percent to family and 14 percent to one or more employees. Forty-three percent plan to sell the business to an outside buyer.
Most business experts say companies should spend at least 10 years in the planning process for a succession. It can take many years to understand organizational challenges, identify solutions and then get all the puzzle pieces to fit.
In our survey, the majority of companies (41 percent) have a target date for the transition that is at least three years to five years out, with only 14 percent planning to change ownership in the next year.
Twenty-five percent have a goal of more than five years, with 18 percent aiming for more than 10 years from now for the transition.
Of the companies we surveyed, 22 percent reported they had been through an ownership transition in the last 10 years. Of those companies, 73 percent described the transition as very successful and 21 percent said it was somewhat successful.
Only 3 percent said “neutral” or unsuccessful when asked to describe the success of their transition process.
Of those companies that had completed a sale, 37 percent transitioned to family members, 41 percent sold to a third-party buyer and 11 percent had employees take over ownership.
While the horizon for the planned succession was years out for most companies, that wasn’t the case for companies that have executed a transition.
Fifty-six percent of those companies spent less than five years planning the transition, and 30 percent did it in less than a year. Four percent worked on it for six to 10 years and 10 percent devoted more than a decade to planning the transition.
Great article and extremely important information. Succession planning in general and for those who seek to retain their family and business culture should start planning years ahead. However, it is best to start as soon as possible.