Ron Solowka realized a long time ago that he wouldn't be working forever. As president of Thunderhill Construction Ltd., he knew the smart thing to do was to plan properly for the eventual passing of the torch to family members.
In textbook fashion, according to succession-planning experts, the Toronto-based general contractor is doing just that.
"I went through sort of the same thing with my dad. Only he thought he would be on the job forever and we really did not have a succession strategy," says Mr. Solowka, 57. "Rather than repeat the same mistake, we decided to go another way."
That meant adequately preparing his daughters Robin and Kyla to take the reins, using all the available techniques currently recommended for family business owners.
Twenty-six-year-old Robin started working part-time at Thunderhill while in her mid-teens and also took a family-business course at Ryerson University. In the past year, she has assumed a full-time position as the company's director of marketing and communications. Sister Kyla, 28, is the company's real estate and strategy consultant.
"I don't feel 100-per-cent confident that I can run the business at this point," Robin says. "I am currently going through the succession-planning stage. I think because of our involvement for the past 10 years, my father is realizing that we are bringing on board many new ideas and talents, especially in the management and operations end of the business," she says.
Robin says the transition has been building during the past couple of years, with the younger Solowkas being introduced to suppliers, sub-contractors and customers.
"We have recently been working with the lawyers and accountants to flesh out the issues of ownership, titles and roles, as well as future directions for the company," she adds.
Succession planning for family enterprises has changed dramatically over the years, says Mary Han, assistant professor of entrepreneurships and strategy at Ryerson University. In the past, such planning happened closer to the time when the founder was about to leave the business.
These days, increasing numbers of founder entrepreneurs "are empowering the next generation to be the strategic decision-makers and play a key role early on," she says.
Dr. Han says there are three areas family businesses should be wary of when planning for succession. "They should avoid parental shadowing, such as when the firm's strategies are locked in the past," she says. "They should also avoid a 'clean-slate' approach to the past where all traditions, legacies and its secret to success are discarded.
"Thirdly, they should avoid indecisiveness. Instead, members of a family business may need to pay more attention to being adaptive; by adapting the business to current competitive conditions, to new family dynamics and to a new ownership structure," Dr. Han says.
A 2006 survey from the Canadian Federation of Independent Business (CFIB) found that slightly more than one-third of independent business owners in Canada plan to leave their firms within the next five years. It also found that most owners of small businesses aren't adequately prepared for business succession: only 10 per cent have a formal, written plan; 38 per cent have an informal, unwritten plan - and 52 per cent don't have any plan at all.
The survey also found that accountants and legal advisers are the most common types of professionals used by small business owners to prepare a succession plan. Catherine Swift, chief executive officer of the CFIB, says it is also important to set up a family council to deal with all the emotional dynamics that will certainly arise.
A number of other factors should be in place to ensure a smooth succession, says Eileen Fischer, Tanenbaum Chair in Family Enterprise at York University's Schulich School of Business.
