Planning for the next generation

December 18, 2017 -  By

Many landscape industry businesses are expected to undergo a major transition as the baby boomer generation ages and owners seek to sell their businesses, if they are able to do so. However, statistics show that most businesses aren’t sold but liquidated and not according to the preferred timing of the owner. In other words, an unplanned event (disability, divorce, death, etc.) caused the sale or liquidation. Based on these stats, many boomers are in for an unpleasant surprise.

Those businesses that are successfully sold or transitioned are most likely going to someone from the next generation, which may or may not include family members. Business owners would be wise to plan now to prepare their businesses for such a sale or transition, even if the planned sale or transfer is years or decades from now. The inevitable may occur sooner than you think.

Begin by putting yourself in the shoes of a member of a younger generation. What would you want to see in a business you’re going to acquire? Of course, you would want to see a profitable company with a stable customer base, as well as all the other normal things that would show up on a buyer’s checklist. But, what else? Keep in mind, most businesses don’t sell. The basic buyer’s checklist might not be sufficient to prepare your business to be attractive enough to be purchased.

Many of our clients are in the process of such a transition to the next generation. These experiences have provided me with some additional insight, which I’m pleased to share with you. This list isn’t meant to be an exhaustive one. It’s simply a list of items I’ve encountered. You may decide what’s relevant to your situation.

Technology

The next generation wants to see technology in place and effectively utilized—business management software, paperless time reporting, GPS, equipment tracking, mobile applications, automation and more. They don’t want to take over a business with outdated technology where big investments would be required to get up to speed.

If family members are the next generation in your situation, it’s best to invite them to participate in the process of technology selection, deployment and usage. By doing so, they will fully buy into these solutions. If they are left out of the process, they may harbor resentment about getting stuck with technology solutions they can’t embrace or easily change.

Long-Term Strategy

Implement a solid strategic plan and a commitment to an ongoing strategic planning process—hallmarks of high-performing businesses. The next generation wants to know what “the plan” is and how it affects them. This is especially true for family members. They want to have some insight into the timing of an intended transition. This knowledge brings peace of mind and a sense of security.

It’s been my experience that many owners hold on tightly to their long-term plans, unwilling to share them with anyone other than their closest advisors. I think it’s a mistake to keep these plans a mystery. Instead of keeping everyone in the dark, it’s much better to be transparent with key people and to use your remaining time to prepare the next generation by investing in their development.

Professional Development

Next-generation buyers also want to see a proactive and robust professional development plan in place. They recognize they aren’t ready to take over yet, even though it may seem like it at times. Despite their abundance of energy and ambition, they understand their need to be nurtured along, invested in and developed.

There are two dimensions of professional development. The first is external to the business in the form of higher education, performance coaching, involvement in peer groups and other options. There is great value in these forms of professional development because they provide outside input, fresh ideas, best practices and accountability for development.

The second dimension of professional development occurs within the business itself. In many situations, there is an opportunity for the older generation to begin to let go of certain things, with oversight and guidance. Take the training wheels off and allow mistakes to be made so hands-on learning in real time is possible. Once the transition occurs, the next generation needs to be ready.

The next generation is waiting. Will it be ready?

Phil Harwood headshot

About the Author:

Harwood is a Managing Partner with GrowTheBench and Pro-Motion Consulting. Reach him at Phil@GrowTheBench.com. He is a Landscape Industry Certified Manager, NALP Trailblazer, NALP Consultant, and Certified Snow Professional. Harwood holds a BA in Marketing and Executive MBA with Honors from Michigan State University.

Comments are currently closed.