What Is A Succession Plan?
A succession plan involves building the value of your company and developing a strategy to replace yourself while protecting the future of the company and its profitability. Fewer than 30 percent of all private companies ever transfer to the second generation, which means that 70 percent fail. The odds are even more difficult for second-generation companies that are transitioning to a third generation. Meanwhile, the Small Business Association notes that 75 percent of a typical business owner’s net worth is tied up in the company, and only 22 percent of owners report planning for their succession or exit.
Why Is Succession Planning Especially Difficult for Roofing Companies?
Many roofing contractors avoid succession planning because they do not believe they can derive value from their company, which frequently, is shown to be true in valuation formulas. Roofing contractors have few assets to parlay into a sale or transfer, and often have lingering liabilities if they haven’t insured the workmanship of the roofs they’ve installed. Unlike service customers with a regular roster of customers, roofing jobs are typically one-off jobs. Read the rest of this entry »
