Survival in the construction industry requires commitment, toughness and intelligence. Unlike many other industries, the ability to grow and profit depends heavily on those involved in the process. Without a consistent customer base, you have to go out and create more business on a regular basis. Therefore, it really is all about the people – both those in your company and your clients.
As a result, you may spend your days on operations, bidding, new projects and many other aspects of a healthy construction firm. So there is a chance that creating a formal plan for the succession of the executive team and owners may have slipped to the background. You, your family and your colleagues have likely spent decades making your business an integral part of the community, and all of that hard work and dedication should not be forgotten. In order to avoid that problem, make sure you are asking the right questions.
Commitment can mitigate succession problems
Succession planning may not be a comfortable topic. However, it is a vital one. Without a focus on this aspect early on, you may encounter cash flow problems, have difficulty preparing for retirement or even lose the company altogether. Instead, take control of your future via succession planning.
Your level of commitment to your business is unparalleled. At Clark Schaefer Hackett, we bring that same dedication and drive. Over the years, we’ve worked with many people in your industry to deliver effective succession planning, wealth preservation and tax consulting services to ensure that their businesses are ready for the long haul. We build a high level of trust with our clients as each relationship forms. We are here for you, and we are ready to ask – and answer – the tough questions. You have goals for your company, and we are standing by to be the resource you need to hit every single one of them.
A formal plan will position your business for future growth
The unfortunate reality is that succession planning can be an uncomfortable conversation. Even so, it is one that needs to take place, and with a formal strategy you will know that your business is prepared for the challenges that lie ahead.
Many construction firms encounter these problems because they have all their eggs in one basket. In an attempt to avoid risk, the structure of the business may have stayed the same for decades, without question. Instead, the goal should be to find a healthy balance and make sure that future generations can make money, while the current one has enough left over for a comfortable retirement.
Without succession planning, there is a chance that the stress levels in your company are on the rise. For example, the oldest generation in your firm may be looking for a way out, but the transition could be too slow – causing problems regarding leaving enough working capital for the next generation to grow the business. To avoid these issues, you must ask the right questions. Is there a dynamic business strategy? Are performance systems and leadership development systems in place? What is the contingency plan? Provide answers now, so the succession plan works.
Multifaceted approach required for effective succession planning
There is a two-fold approach to succession planning. First, there is the tax side, such as deciding whether a transition from a C-corporation to an S-corporation is needed. This call will be made after you have a strategy in place, then you can gauge whether or not the existing tax structure helps or hurts the process.
Next is the business side of succession planning. This is where you sit down and determine what you want the future of your company to look like. What role do you want to play in the transition? How can you keep valuable employees on board after the founders are gone? Deal with these major issues early on so you can achieve your goals.
Address the common problems with a formal plan
Creating a formal succession plan means addressing key problems head on. For example, each generation within your company has a different set of goals. Everybody wants something unique out of their careers. This can complicate the planning process and create conflict. Where one person wants to see the business in his or her family for years to come, the other wants to cash out.
This is why long-term planning is important. You must identify the financial and personal conflicts within your company. Then, decide who is going to stay involved with the executive team and ownership moving forward. Everybody needs to be on board with that plan and the steps, plus they must have a firm understanding of the potential risks. It is also crucial that you look into the details of the formal plan to determine whether or not it is the right strategy for your business.
Needless to say, your company is important. It is a part of your life, and you have a significant portion of your wealth tied to its success. While it is hard to talk about succession planning – not to mention trusting somebody else to run the business as well as your current team does – it is a vital part of securing your future.
Advisors can ask the tough questions
When working alone, it is easy to stay focused on the business-side of the industry. This could leave out succession planning, putting your company at risk. With an advisor, this won’t happen. Instead, the tough questions will get asked. You will have a trusting relationship and access to the right tools you need to set yourself up for success.
It takes a unique personality to excel at succession planning. Clark Schaefer Hackett is willing to ask you the hard questions. We bring a high level of experience into the mix and we’ve proven adept at coordinating the complex elements of succession planning. Our dedicated team understands the issues you face on a daily basis, and we can look at your situation and offer clear directions to grow your business. This includes cash flow analysis, tax planning and consulting services. We are willing to deal with conflict head on, so every issue gets dealt with in a timely fashion.