The Anatomy of a Succession Plan
“It can happen to anyone.”
As Jackie Wildman concludes her story with that quote, you understand the gravity of the words. During the everyday grind, she understands shop owners concentrate on a number of different items, from employee management to customer service to improving processes—anything and everything that goes into ensuring a business runs properly.
There’s just one thing that falls consistently through the cracks. And the co-owner of Precision Auto in Germantown, Md., witnessed it cripple a business firsthand.
“Right after a meeting, one of the members of our 20 Group meetings went back home, was hit by a bus and was killed,” she says. “And his son had just started coming to meetings to learn about the business. He left his son with no plan, no insurance, no money.”
“We pulled together to try and help him,” adds Bud Wildman, co-owner of Precision Auto and Jackie’s husband. “Unfortunately, they had too many difficulties to overcome. Some things we could help with, and some we couldn’t.”
And then those words:
“It can happen to anyone.”
And because of that, the Wildmans have set a succession plan in motion that aims to have their son, Andy, take over the shop within the next five years. While it may be difficult for the average shop owner to find the time for succession planning during the daily grind, the Wildmans want to stress its importance, and show how a little effort and organization can preserve the success of your business for years to come.
SHOP STATS: Precision Auto Location: Germantown, Md. Staff Size: 14 Number Of Lifts: 10 Average Monthly Car Count: 280 Annual Revenue: $1.75 million
Bud’s love of cars runs very deep, tracing back to a childhood filled with building go-karts, refurbishing mini-bikes and overhauling four-wheelers with his father.
And Bud shares a similar connection with his own son, Andy.
“He has a lot of natural talent when it comes to cars,” Bud says of Andy. “And he has always been interested in our business.”
All through his teenage years, from junior high to high school and to college, Andy was part of the shop Bud started way back in 1982 (Jackie came on board in 1996). Andy cleaned up after technicians, washed parts, and was a “filthy mess most days when he went home,” Bud says. So, naturally, after earning his college degree 10 years ago, Andy approached his parents—who were nearing retirement age—about moving into a managerial role that would position him to one day take over the business.
Bud and Jackie’s answer?
“We said, ‘No,’” Bud says. “That was very difficult for us. As much as we wanted him to be part of the business, we wanted him to first go out in the world and experience working for other people.”
After five years of service writing at dealerships, Andy came back to his parents, who were then more open to transitioning Andy into a leading role.
“There are a lot of family-owned businesses where children come into the business too early,” Bud says. “Because he went out into the world for five years, [Andy] doesn’t take anything for granted. He appreciates the opportunity he now has.”
Setting Up the Transition
Once a business evaluation was completed, there were several steps the Wildmans took before finalizing their succession plan.
Identifying a successor. For the Wildmans, this decision was made easier, as Andy was a perfect fit. Bud says Andy exemplifies everything you should look for in a successor: He has experience in the industry; he understands how this specific model of business operates; he has spent time with the employees; and he’s willing to wait until Bud and Jackie are ready to exit.
Forming an advisory board. Once per year, Bud, Jackie and Andy gather together with a team that consists of an attorney, a financial planner, an accountant, and their business coach to map out the succession plan and mapping out the transition in writing.
“Getting input from a number of different people, it covers all your bases,” Jackie says. “And you want to review it every couple years because laws change. You’re refining the plan all the time.”
Choosing an exit date. The Wildmans then had to nail down a goal date for their exit. Jackie says putting those steps in motion will make succession easier down the road.
“You want to begin with the end in mind,” Bud says.
Bud and Jackie decided to join a succession planning class, and most shop owners they work with typically plan for at least five years. Bud is planning to retire at 65, which is four years down the road. Bud and Jackie decided to put the succession steps into motion five years ago, meaning Andy’s transition will take place place after almost 10 years of preparation.
Owning the dirt. Having that timeline allowed Bud and Jackie to properly ensure Andy was able to afford to take the business over, but also allowed them to have a steady stream of revenue after retiring. Because they own the property the shop sits on (“You want to own your dirt,” as Bud puts it), part of Bud and Jackie’s exit strategy is receiving rent from Andy on that real estate in the future.
“This will be part of our retirement package,” Jackie says. “Also, if we leave him the property and something happens to us, he will inherit it without having to pay for it.”
Making the Transition
With all paperwork cleared away, Andy will be ready for ownership whenever Bud and Jackie are ready to retire.
While the Wildmans have not officially signed the business over to Andy, they have taken the very important step of slowly integrating Andy into the everyday over the past year. He now essentially fills Bud’s former daily managerial duties.
While the logistics of succession planning are important, Bud says there’s also a very important cultural shift that must occur for the business to properly move forward. It was crucial to introduce Andy to Precision Auto, so he could get acquainted with both the employees and the customers.
“When you have a strong company culture where everyone is moving in the same direction, where everyone has the same fundamental beliefs and goals, there’s respect that comes with that. Andy has created that as the team leader.”