When it comes to the business of building things, you might have things waxed. But, have you sat down and thought about how you’re building your company for the future?
“Companies will flounder unless they have implemented plans to pass the leadership on to the next generation,” Nicholas Holmes and Matthew Johnson, construction sector experts say.
“As many of the leaders in the construction industry near retirement, firms are grappling with the problem of succession planning. Many companies are either family-owned or closely held and led by baby boomers over the age of 60.”
Related: Succession planning – it pays to do it
“Entrepreneurs invest huge amounts of time, money and patience into building a successful business and not only want to see their legacy continue, they want to be able to exit on their own terms. As a company grows, you need different skills and different personnel to meet them, and likely a more sophisticated, governance structure as it grows. But to do so requires long-term planning that aligns with the business’ strategic plans,” says construction sector expert, Kelly Taylor.
Establish a blueprint for succession in your construction firm
“While there are many ways to develop succession, the most common are generally: Familial ownership transfers, giving key employees the opportunity to buy–in, or selling to a third party,” consultants at Grassi&Co. say.
If you’ve been running the gauntlet as a solo (family-led) business for the past few decades, it might be time to consider a loosening of the belt. You don’t have to kick the family out the business completely, but why not consider that there might be other young leaders out there, from different walks of life, who may hold the keys to unlocking new future-focused innovations in your business?
“Typically, a successful construction company is built with the vision of indoctrinating offspring and other family members. It is generally the most popular and easiest transition plan, especially when offspring are involved in operations, are market-facing, and are driving growth.
“But, matters of family are generally messy with many potholes to consider — especially when dealing with working and non-working family members. For parent-owners with multiple offspring, some active within the company and the others inactive, the succession plan must address how to transfer ownership to the next generation in a way that does not slight the inactive offspring.” Grassi&Co. adds.
The firm suggests that you could consider transferring the ownership in a non-voting fashion: “While day-to-day operations would be dictated by non-family key employees, profitability remains within the family.”
Related: How to implement a formula for succession
A hungry workforce awaits you
Beyond looking to your children or other family members to take the reins, reports suggest that South Africa’s youth is willing and able to work – if you can provide them with some mentorship and upskilling along the way.
“Training and skills development are the keys to a successful future for the construction industry,”Leads2Businesssays. “It is no good identifying up-and-coming local contractors and fast-tracking them without giving them the proper training. It’s imperative to find ways to attract youngsters to the industry to address the skills shortage. We’d like to see more women coming into the industry. Those who have joined the industry have had highly successful careers.”
It’s important to remember that as the future approaches with rapid intent, your company’s youth and employee diversity (at all levels) is necessary for its success. In fact, experts say that diversity should be top of mind when planning for succession – so keep that in mind when you’re looking to inject a little young blood into your construction business.
- “A poll by Hays Canada indicates that half of the country’s construction business owners don’t have a succession plan,”says Kelly Taylor.
- “And of those, only a third plan to launch one in the next year,”adds Robert Lashin, president of Houle Electric.“That’s a step toward extinction.”
- “If you look at all companies, great companies will not necessarily stay great companies. The sustainability of every company is its lifeblood, thinking about succession and how things will continue to grow,” Taylor says.