I think that the best way to begin this blog is with a story. This is the story of a business owner who builds a very successful distribution business over about 20 years. The company, which we will call Warehouse Supply, buys and resells warehouse materials. This includes both new and used racking, conveyors, computer systems, etc. It is an extremely profitable business and continues to be so in this down economy. I was introduced into the company by the CFO who is a friend of mine. The owner of the business, now 56 years old, has started to give some thought to transitioning the business to his son.
My initial conversation with the owner of the business revealed that very little planning has been done throughout the entire existence of the business. The obvious issues included:
- No succession plan and the owner’s family was very dependent on the income from the business.
- No exit strategy.
- The business owner’s 22 year old son had very few business or management skills.
- Very, very few systems in place in the business.
- While the business had a sizeable sales team, there was no sales system in place including no centralized contact management system.
- There is no marketing or business growth strategy in place.
- No retirement plan in place for the business owner.
- Nothing in place to retain two employees identified as critical to the continued success of the business.
Some basic facts:
- Business has been in existence since 1992.
- Business sales for 2008 were $8 million.
- Business is tracking flat for 2009 (Owner considers this a win in this economy)
- 17 total employees (7 sales, 3 accounting, 4 warehouse, receptionist, owner, son)
- Sole owner
- S Corp
As you can see here, this business would not exist if the owner was not there each and every day. In otheer words, the business owner has a great job, but not a business.
The challenge here is where to begin. In the coming weeks, we will determine priorities and begin to outline a plan.
