Every plumbing and drain cleaning company owner has to stop working eventually.

Whether it is a planned retirement, health issues, or death, you will not run your company forever. That is why it is important to think about what will happen to your business after you are no longer running it. Who is going to run it? Are you passing it down to family, appointing someone from within the company, or selling it to an outside party?

These can all be valid options, but no matter what the choice it is important that you are prepared and have a succession plan ready for when you eventually step down from your company. When it comes to creating a successful succession plan, time is your friend. The more time you have to get everything in order, the better shape your company will be in when you step away. 

Here are some vital things business owners should consider when creating a succession plan:

Estimate a timeframe

It is common for plumbing and drain cleaning company owners to put off thinking about retirement. You have a business to run and running it is a more pressing matter than thinking about leaving it.

However, you should establish a timeframe on when you expect to step down. In order to plan for succession, you have to have some kind of idea on when you will hand over the company. Having this timeframe will help you figure out when the real planning should begin.

I recommend that you start planning to sell your business at least two years before you step away from it. This is the bare minimum timeframe and the longer you have to plan, the more time you will have to get financials in order and most importantly find a suitable replacement or a reputable buyer.

Brian Bond, owner of Phoenix-based business brokerage Strategic Business Brokers Group, says time is your best friend if your succession plan involves selling your company.

“You are going to get less value for your business if you don’t have enough time to plan a sale,” Bond says. “You need to make sure you have accurate financials, a healthy client pipeline, and working equipment. Ensuring you have these things takes time, and if you have time to get your ducks in a row, you are more likely to get a better value for your business.”

Be proactive and start screening for a successor

Start identifying potential successors within your company or vetting people outside the company to eventually take over. 

Conduct a behavioral skill assessment on anyone you think might be a good fit to run the business. You should do this even if you plan to hand the company over to family. A behavioral skill assessment will allow you to identify leadership qualities in potential successors. The people you first think about passing your company onto may not actually be the best fit, and this assessment will help you identify what leadership skills they have. Then you can either train them to obtain the skills they’re lacking or find a different replacement. You must be proactive and find a successor as early as possible. They will need the extra time for training and shoring up the skills they may lack.

Your successor should align with your core business values. They must be an organizational fit, meaning your employees must respect them. Your successor must be innovative, entrepreneurial, and most importantly have people smarts and humility. Your successor should be able to read a room, be self-aware, and not need their ego stroked.

Make sure you take the time to write out what you envision their job being exactly. What are your responsibilities as owner now and what would be the responsibilities of your replacement? When would they officially take over the company and what is the plan to onboard them?

Prepare your successor for your departure

You must have a plan for how you will onboard your successor. Don’t sell your company like you would a car by giving them the keys and heading off. Train your successor and ensure they are ready to do the job before you formally step back. This means doing a trial run where you allow your successor to run the company for a few weeks. You should only help during an emergency.

Leaders only learn to lead by doing. You must let them learn and make mistakes. Force them into high-pressure situations. If they are able to thrive in these scenarios, they will be fine running the business on a daily basis.

Also be sure to let your employees and customers know what is going on so they understand what will be happening going forward and who is going to be leading the pack.

Ensure they know your industry

Train your successor to understand the landscape of your company. They must know the compensation of every employee and the return on investment they bring the business. Your successor must understand the history of your company, the current state of the industry, and the current state of your competitors. They are going to need to start building relationships with customers and vendors to ensure those long-term relationships you built stay nurtured.

Disclose to your successor any legal or financial liabilities your company may have. It does no good to keep them in the dark. Bond says if you are planning on selling the business to an outside party, it is imperative that the buyer understands the financial health of the business.

“Any potential buyer must understand clearly what your company’s revenue is, what gross profit margins are, and what its expenses are,” Bond says. “Why those expenses exist and how you are currently managing them.”

You will not be the head of your company forever, which is why it is important to create a succession plan. Start creating a plan at least three years before leaving the business, find the right successor, and give them the tools to succeed. If you do this, you will ensure the health of your company long after you are gone.

About the Author

John Waters is the principal of Waters Business Consulting in Scottsdale, Arizona. He is an expert at helping contractors establish a succession plan that develops leaders and grows their businesses.