5 Strategies for Successful Succession

If you own or stand to inherit a privately held trucking company, change is coming.

Unless you sell to a third party, succession is inevitable.

And while medical science does not yet allow us to eliminate ownership turnover entirely, a detailed succession plan will lessen the impact on everyone concerned when it occurs.

Preplanning for change is a critical first step for ensuring a long and stable future for any company, says John Holland, senior consultant at Plutus Consulting in Oakville, ON. He has a number of clients in the transportation and logistics field, and one of his goals is to minimize the financial and personal curve balls that create confusion when the old guard steps down.

Here are five tips that will help avoid those unpleasant succession surprises.

1. Don’t be caught unprepared

Start thinking about this stuff now, even if you’re not anticipating imminent changes. Experts estimate more than 40 percent of family-owned businesses will experience a change in ownership in any five-year period. Of those, only four percent will have a formal succession plan in place.

“In the next 10 years, about three-quarters of boomer businesses are expected to be handed over to the next generation,” Holland says. And with each successive generation, chances of continued success dwindles.

“You need to get good advice to develop a plan and execute it properly,” says Leonard Kane, president and general manager of Len’s Transportation Group in Surrey, BC. In 2008, he took over the company that his father, Len Sr., started in 1964.

“It was a baptism by fire,” he says. “The economy turned and we had to downsize the entire operation to just a few key people.”

The company has since rebounded to field 23 trucks in the heavy-equipment hauling industry out west. Economy notwithstanding, however, the transition was relatively smooth because he and his father explored all their options and relied heavily on the advice of experts.

And he’s not done yet. He’s already looking ahead, even to the point of anticipating his own passing (though he’s only 38 years old), so his family is not hit with an unreasonable tax burden.

“Basically, you have to plan so your assets can be liquidated or easily transferred around at time of death,” he says.

2. Don’t be in a hurry

Most successful transitions require a minimum of two years. Much of that will be in the preparation for a seamless transfer while making sure the business performs as well as possible.

“Taking over is not something you do overnight. It is a process,” says Margaret Hogg, general manager at Drapeau Transport in Rexdale, ON.

A sudden health crisis in 2000 forced her father, George Hogg, to ask Margaret to step in and help run the 26-truck fleet and 200,000-square-foot warehouse. It wasn’t until 2006 that she fully assumed control, and even now there are some loose ends that need to be tied off to complete the transfer of power.

“We’re prepared, God forbid, if that [transfer of power] should become unavoidable in the next 10 years or so. But I really don’t like thinking about it,” she says. “It was never in my mind to take over and run the place. I came back to help keep it going or maybe sell it. But I saw what my father was building and I caught his vision that it is not about how big you can grow, but how well you can do a job,” she says.

3. Learn every aspect of the business

When the older generations step away, they’ll take a lot of knowledge capital with them.

“The youngers need to be well-assimilated into the business,” Holland says. “Train them up. Preparing the next stage of management is critical.”

Kane agrees that a training process needs to be in place.

“You can’t just throw someone into the deep-end of the pool and say, ‘OK, it’s all yours now.’ They have to understand the business, and there’s an apprenticeship period,” he says.

In his case, he spent seven or eight years as a manager before delving deeply in the operational side of the business.

“As a manager you have expectations of everyone. When you’ve done their job for a while, you see the challenges. You understand exactly what the job entails,” he says. “It’s a good experience for any manager to actually do the job first.”

In Hogg’s case, she found she enjoyed managing the company from the ground floor. She likes to be with the employees and to work with them toward a common goal.

“I like to see what they face on a daily basis, so if there’s anything I can do to help them get the job done, I know exactly what they need,” she says.

“I would advise anyone to know every aspect of the business. Not just how to dictate. If you are going to be a positive mentor leader then you need to know how everything is done from top to bottom.”

4. Take care of customers

Customers can go into a state of shock when there’s new ownership, Holland says. They may not like the young generation or their fancy new ideas.

“And if they’re not happy, it will hurt the company. It is a massive shock to lose significant customers, and unfortunately it happens all the time.”

That’s why both Kane and Hogg made sure to meet with as many customers personally, with their fathers if possible, to help put a friendly face on the new regime.

5. Take care of employees

“Internal conflict is a real danger. There are untold personality clashes whenever someone takes over,” Holland says.

“It’s really important to surround yourself with good people. Whoever your parents leaned on, make sure you listen to them when they have something to say,” Kane says. “Make them your go-to people. Respect what they have to say. That’s only going to make your transition easier.”

Even with careful attention to detail, and a strong plan in place, there are plenty of unknowns when businesses change hands, Holland says.

“You want to minimize the bombshells and surprises,” he says. “You’ve got enough on your plate.”


Have your say


This is a moderated forum. Comments will no longer be published unless they are accompanied by a first and last name and a verifiable email address. (Today's Trucking will not publish or share the email address.) Profane language and content deemed to be libelous, racist, or threatening in nature will not be published under any circumstances.

*