Sooner or later everyone retires. It is a simple fact of life. Ensuring that a remodeling business survives beyond this inevitability has become an important goal for many remodelers — whether they plan to retire next year, or 10 years down the road.

But in planning a succession, tough questions soon arise. Who will take over the company? Will there be enough money from the transaction to comfortably live on? Will a family member or employee purchase the company from you or will you have to sell it to an outsider? All of these questions can be managed with a well thought-out succession plan that lays out a smooth transition between you and the new owner(s).

Succession planning is a process, not a horse-race to the finish line, and should be carefully reviewed by the owner and a team of qualified financial, accounting and legal experts.

Within the remodeling industry the succession planning process can present special challanges as most successful remodeling companies rely on long-term, personal relationships — with employees, trade contractors and customers. How to maintain these relationships and keep your company’s hard-earned reputation at a high level is another important factor in this process. Addressing these considerations depends largely on the intended ownership. Different succession plans flow from the initial decision to a) pass on the business to a family member, b) sell the business to a current employee or multiple employees or c) put your company up for sale to the highest bidder.

All in the Family
According to Charles Schrader (see sidebar on pg. 19), 95 percent of all construction companies are family owned and only three out of 10 will succeed to the second generation. Among the 30 percent of companies that successfully pass to the next generation is Hobbs, Inc., of New Canaan, Conn.