Do You Have a Succession Plan?
By Damian Lang
You’ve worked hard your entire life, and maybe retirement is on the horizon. But how will you make that transition?
I can tell you this: Building a successful construction company isn’t enough. You have to have a succession (continuation) plan to keep it prospering without you. With no succession plan, you may end up having to keep running hard at an older age, or selling out for pennies on the dollar.
Take “Bob,” for example. Bob built himself a really successful construction company over the last 35 years. At age 65, he was ready to retire and assumed one of his children would take over the company. His daughter, Darla, had the most potential to run the company, but without a long-term plan developed and no vision shared with her, she became bored with construction. Darla joined her husband in the banking business and moved several states away.
Bob’s older son, Bill, worked with him for several years but decided to take a manufacturing job. His other son, Ray, had issues with drugs and, though still with the company, wasn’t a candidate to run the business. Bob realized he had no choice but to sell the company. Having invested profits back into the company every year, he figured it would fetch a pretty good selling price. Bob figured wrong.
Unlike most businesses, construction (including mason contracting) companies are only worth what they can earn in the future with the management teams in place to drive future earnings. When Bob put the company up for sale, he discovered there were no buyers.
Bob had not prepared any of his managers for the undertaking of running the business. He learned that there isn’t much good will to offer when selling a construction company, and worn out equipment isn’t worth much on the open market. So, with no one prepared to run the company in Bob’s absence, his only choices were to sell the tools and equipment for pennies on the dollar or continue running the company, rather than retiring.
I can’t tell you what happened to Bob next, since he is fictitious. What I can say is that Bob’s story is a familiar ending for most construction company owners.
So how do you assure you don’t end up in the same situation as Bob? You must develop and/or partner with future leaders to succeed you. If you start the planning process early, instead of the day you decide it is time to walk away and take more time for yourself, you will be able to retire before you’re completely worn out.
At age 52, I have already started transitioning ownership to some of the managers of my construction companies. I have shared 39 percent of my masonry business, and 28 percent of my general contracting business to those I have identified as future company leaders. By the time I am 55 years old, these managers will have purchased their shares from me with company profits. At 55, I plan to share more ownership (up to 49 percent) with these or other managers who I believe have the highest potential to drive the company’s operations and deliver nice profits for them and me. At age 60, I plan to let my majority of the company ownership go to these managers or other chosen future leaders. And, at that point, I will begin my transition into retirement.
No matter your age, if you’re a business owner, develop and share a vision for the next generation of leaders who can run your business without you. You’ll be able to enjoy some extra time off or, at the very least, enjoy the retirement you deserve.
If you have a child who is truly capable of managing the business in your absence, treat him or her just like you would any other leader with whom you’ll share your vision and eventual ownership. As for me, if all goes as planned, I will be able to cruise at age 60, or the age I decide to turn over my total stake in the companies to my successors. I’ll also work with them to choose their own successors. Then one day, they can enjoy the retirement they deserve, too.
Damian Lang owns and operates several companies in Ohio. He is the inventor of the Grout Hog-Grout Delivery System, Mud Hog mortar mixers, Hog Leg wall-bracing system, and several other labor-saving devices used in the construction industry. Damian’s latest venture is Malta Dynamics Safety Co., which focuses on bringing quality safety products to construction customers at the best possible prices. He consults with leading mason contractors and can be reached at