62 Vancouver Island Construction Association 2015

Starting a construction project is like starting a business – before beginning, both require a blueprint. Without a blueprint,

an already challenging project becomes

impossible, and a business cannot thrive.

Among construction businesses, a

common void in the creation of the

business plan is the inclusion of succession

planning. The ignorance of this void is

detrimental to the future of a company.

Simply put, “succession planning is the

creation of a framework for how one is

going to exit their business,” explains Doug

Tyce, regional leader of Real Estate and

Construction Services at MNP, “whether

this is an owner who wants to retire and

pass the business to an employee, or a

father handing down the company to his

child.”

START WiTh ThE END iN MiND

Succession planning starts with a

conversation between the owner and an

accountant or financial consultant, to

evaluate the current business and financial

situation.

“Part of the conversation is knowing

where you want to be when you retire,”

says Tyce, “and how are you going to

achieve your goals.”

In most cases, construction businesses

have not considered succession planning.

Their main purpose is to put food on the

table, a roof over their heads, and make

more money being their own boss. This

causes problems – the owner becomes the

key to the prosperity of the business, even

though they may not have the tools to run

their business successfully.

iNVEST iN BUilDiNG ThE BUSiNESS

“In most cases, a business has no

succession plan because it’s an individual

electrician or carpenter and there’s no one to

take over his business when he’s done,” says

Tyce. “They know the trade. The challenge is

educating the business owners to go outside

FUTUrE aSSUraNCE:THE ImporTaNCE oFSUCCESSIoN plaNNINGJust started your own business?It’s never too early to think about the future.By Joy Knowles

VICA 63

their comfort zone and focus on the business side and not the action side.”

Having the success of the business ride solely on the shoulders of the owner is dangerous. Should anything happen to incapacitate the principal of the business, the inflow of money stops, or there may not be insurance to cover the accident or tragedy.

If the efforts of the principal are focused on day-to-day operation, there is no time to train someone to take over. In this type of business scenario, the company has no reputation outside of the reputation of the owner.

For proper succession planning, owners need to focus on building the business – creating business strategies and plans while empowering employees.

“You know you’ve achieved a successful succession plan when the principal of the business has become redundant,” Tyce adds.

A SUCCESSFUl PRoCESSTo further illustrate the importance

of succession planning and its positive end results, Tyce provides the following example:

A well-established construction company has been run for years by three successful partners. Currently in their early-50s, they’re looking at retirement. Fortunately, these owners included succession planning in the development of their business. They’ve already identified three people in their 30s for future ownership.

At this point, a company like MNP would help them establish a program where over the coming five or six years the next generation would gradually transition into roles of authority. Individually the future owners could never run the company, but collectively they have the skills to take over the business.

Due to their forethought, the current owners brought the future generation in on a staggered buying process. By mentoring them over the years, the current owners have ensured the next generation have the skill set and financial wherewithal to

take over the business. The conversion isn’t

overnight, allowing the transition of good

will and reputation.

To ensure the best succession planning

and a smooth transition, “you want to start

now,” recommends Tyce. “No matter where

you are in your business, you don’t know

what tomorrow will bring.” n

The best and the worst:What business shouldand should not do.

The best1. Start today.2. Create a plan.3.Investinbuildingupyouremployees

and business system.

The worst1. Maximize profits today to the detriment

of maximizing value in the future.2. Having no plan for the future. 3.Notdelegatingresponsibilitiesor

developing people to help further the business.

ExitSMART.ca

PLANNING FOR SUCCESS MEANS PLANNING FOR SUCCESSION.You, and the business you’ve worked so hard to build, can both thrive long after parting ways. Our succession planning team works closely with you to develop an ExitSMART™ plan to take care of your family, employees and stakeholders while protecting your legacy.

To book your complimentary one-hour consultation to discuss your succession plan, contact:

Doug Tyce, CPA, CA Regional Leader, Real Estate and Construction Services T: 250.734.4368 E: doug.tyce@mnp.ca

Wendy Lewis, CPA, CA Regional Leader, Succession Services T: 778.225.7226 E: wendy.lewis@mnp.ca