Planning for the Next Generation

Planning for the Next Generation

Every company experiences it at some point—the changing of the guard. And with the current generational shift from boomers in leadership to Gen-Xers and millennials, there’s never been a better time to talk about succession. Leo MacLeod, executive trainer and coach, joins us to share his thoughts on succession planning—who should do it, when you should start and how to find the right successor. 


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Run Time: 42:03

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Brandon Laws: Leo, good to have you.

Brandon Laws: Leo, I think there’s a shift happening because of just the demographics and the generational. So boomers are leaving the workforce or leaving – as far as they’re selling their businesses. They maybe want to retire. Millennials are stepping in the leadership roles. Xers are taking over. What’s this whole succession planning thing all about?

Leo MacLeod: Yeah. Well, here’s the scary fact. Ten thousand boomers are retiring every day. Every day!

Brandon Laws: Every day?

Leo MacLeod: Every day.

Brandon Laws: Wow.

Leo MacLeod: As we talk, people are leaving.

Brandon Laws: But it’s hard to wrap my head around that –

Leo MacLeod: Right now, right now. There goes another one.

Brandon Laws: Are they owners of the business?

Leo MacLeod: Well, that’s 10,000 boomers who are retiring from the workforce.  So how many of those people own businesses? Enough, right? Enough for it to be a concern. So I got into this business because I just heard of a lot of people, a lot of firms that were saying, “Yeah, I got to leave my business someday here and I haven’t really created a plan.” There’s a whole bunch of people who are in that boat, who haven’t done the planning, who haven’t thought about it and are now in a position of trying to figure out what to do.

So I thought, well, maybe I can give them some help. As I started to get into it, I realized it’s really complicated because there are different parts to it. There’s the emotional part, the people part. There’s the logistics part, right? There’s the financial part. So you actually need a team. You need an attorney. You need a financial planner and then you need what I would call succession coaches, which is what I am. So I’m the guy who helps you kind of navigate the overall plan because a lot of it frankly is just trying to figure out, “How do I want to leave this firm? What does it mean to me? What am I going to do afterwards? Can I trust the people who are taking over? How do I develop them?” There’s a lot of questions.

Brandon Laws: Well, I would have thought about the people side for sure and it’s interesting that you take on that role. I wouldn’t have thought about the attorney and the financial planner side of the equation. But that makes a lot of sense. You have somebody that potentially could be selling their business or relinquishing options in the organization, whatever it may be financially.

Leo MacLeod: Yeah.

Brandon Laws: All that needs to be sorted out. I wouldn’t have thought about that. But you have to think about it, right?

Leo MacLeod: It’s a big part of it. The money part is the big part of it because, well, let me say this. It depends on what you want to get out of the business. It depends on how important it is to you. So when I sit down with companies that are thinking about doing – leaving their business at some point, I have two questions.

One is, when do you want to retire? When do you want to exit the business?

Brandon Laws: What if they said six months from now? That will be a little concerning, right?

Leo MacLeod: No, I had that. I have that story. I do. I do. So one question is, “When do you want to leave?” and the other one is, “What do you want it to look like afterwards?” How is this going to end?

So I will go into the story where someone actually called me up, because I write a column for the Daily Journal of Commerce on succession planning. This guy calls me up. He owns an engineering firm. It’s not very big. It’s maybe 20 people and he says, “Yeah, I was reading your article and your column.” He said, “It sounds really interesting. Here’s my case. My wife is really getting on my case because she wants me to retire. I’m about 65 years old. I’ve had this business for 30 years and I really need to get out. Can you help me?”

I thought, you know, I –

Brandon Laws: Yeah, you have five years.

Leo MacLeod: There’s all kinds of flags coming up. I’m saying, well – I ask him, “Look, do you have an owner in mind? Do you have somebody who you think could step into this position?” Well, I’m not really sure.

Brandon Laws: That’s a no.

Leo MacLeod: That’s all right, kind of. It’s a question mark. It’s a big question mark and then I said, “Well, how strong is your business? Do you have recurring revenue?” I mean what are we buying here? Are you just in the business of going out and getting work? How reliant is it on you? In other words, if you leave the business, is it going to collapse?

So yeah, it’s pretty reliant on me. I mean I’m hearing all these different flags. But then I said, “Well, what’s your objective? How do you want this to end?” He says, “I’m not really that concerned about getting that much money out of the business for myself. I’m more interested in trying to keep it together for the people who are here.”

I thought, “Well, that’s kind of interesting.” As I started to get into it, working with them, I realized that they had a really great like family kind of culture and he was sort of the patriarch. Right, which is kind of common.

While it was challenging to find owners among the people who were there, we did find them. We found two people within the organization.

Brandon Laws: That’s great.

Leo MacLeod: But the key was – and this is what made it work is – the owner, the person who was leaving the firm, was not asking for a lot of money out of the deal. Frankly, that made it easier. It made it easier for the deal to go through because at the end of the deal, if I said, “Hey, Brandon. You know, you work for me. How would you like to take over my business?” so what does that require? Does it mean just doing what you’re doing or am I taking on some kind of financial risk?

Do I need to buy you out? How much do you want out of the business? How much do you want me to be paying you over time? How is this going to work? That part, a lot of people avoid.

Brandon Laws: Yeah.

Leo MacLeod: And they wait too long because frankly, it’s like any kind of loan. You need time, right? In order to pay off anything like that, just like your home, right? You buy a home. You’re not like – someone says, “OK. Can you write a check for $500,000?”

Brandon Laws: Most people don’t have that sitting around.

Leo MacLeod: Exactly. So –

Brandon Laws: And that’s probably where the attorney and the financial planner come into play with that side of the equation.

Leo MacLeod: Yeah, there’s – it’s complicated and it’s not my area. But there are a lot of tax implications as well.

Brandon Laws: Yeah, it makes sense.

Leo MacLeod: So there’s a lot of tax implications, of receiving a lot of money for your business all at once.

Brandon Laws: Yeah, right. That’s why people probably take it over time.

Leo MacLeod: You take it over time. There are ways of structuring the deal. But the key is, too, if you’re giving the business to someone else, if someone in your firm is going to be picking it up and owning it, how can they afford to do that? Because that’s expensive.

Brandon Laws: Yeah.

Leo MacLeod: So that’s the challenge. The challenge is that you as an owner have a certain price. You want to get the most out of it. Most people do and the people who are at the firm, they’re not high rollers. That’s why a lot of times –

Brandon Laws: They’re employees.

Leo MacLeod: Yeah, they’re employees. That’s why a lot of times, owners look for third parties, look for people who have got deeper pockets, who just want to buy the whole firm.

Brandon Laws: That’s – but then they might bring in their whole crew, culture, changes.

Leo MacLeod: What they generally try to do is it runs on kind of the business. So if you’re producing a product and you have a process and you have a technology, you have a plan and that’s what you’re buying, then yes, you’re essentially just buying – you’re buying the customer base. You’re buying the intellectual property.

Brandon Laws: Equipment.

Leo MacLeod: Equipment, all that stuff. The people are important, but they’re secondary. If you’re buying a professional services firm, like for instance like Xenium, I mean what are you buying? Maybe they’ve got some assets for an office building. But essentially it’s people.

Brandon Laws: Yeah.

Leo MacLeod: So in that situation, you need to figure out how are you going to hold on to the people? Or more specifically, how are you going to replicate the business when you’re not around, which is the tricky part because when you start looking at leaving a business, you have to look at replacing yourself.

Brandon Laws: Yeah. That story that you were just describing, did it have a happy ending? You said you were able to identify a couple of people within the organization. What was the result of all that?

Leo MacLeod: He’s riding through the Rockies on a motorcycle and spending more time with his –

Brandon Laws: He’s got a happy ending then.

Leo MacLeod: He’s spending more time with his grown children.

Brandon Laws: Yeah.

Leo MacLeod: And loving life and he’s still involved. He’s still involved –

Brandon Laws: OK. So he’s still an owner of the –

Leo MacLeod: So he’s an engineer and he comes into the office maybe once a week for a little bit. But the other thing too is this guy is very – he’s a hands-off kind of guy. So he’s not going to come in and say, “What are you doing?” and you should be doing it that way.

Brandon Laws: So it sounds like he – so he’s riding around the Rockies on a motorcycle, he’s still involved in business. He’s still an owner then.

Leo MacLeod: He’s not an owner. He’s just an employee now.

Brandon Laws: OK.

Leo MacLeod: Or maybe just a contractor.

Brandon Laws: But some people want that and maybe early on in the succession planning process to identify what involvement you want to have, if any.

Leo MacLeod: Yeah, but it should be a clean break. At some point, you should stop being an owner and now you’re an employee and that’s a change for people. Some people are better at that than others and that’s part of knowing yourself. That’s why a lot of this, frankly, is more personal in nature. That’s where I coach people, to try to figure out, “What do you want out of life?” and it almost becomes kind of a life coach kind of a –

Brandon Laws: That’s kind of a – I like that. It’s a holistic view of what do you want out of this transition. And what do you want out of your life?

Leo MacLeod: Yeah, right. What’s next for you? And then the other part is who’s going to take over the business and are they ready? How do we develop them? So that’s what feeds a lot of my business is the leadership development for the succession plan.

Brandon Laws: Yeah, that makes perfect sense. So let’s back all the way up. That same story, he came to you. He wanted to retire in like six months, get out of the business within the next six months. It was more – probably more of a quick turnaround than you thought. Ideally, if somebody came to you and you’re advising on succession planning, how far in advance are people looking at really starting the planning process?

Leo MacLeod: Ok. So I will give you a contrast. A contrast is another engineering firm. It’s much bigger. But the person is being a lot more deliberate and intentional about the whole planning process. And he’s giving himself 10 years.

Brandon Laws: Wow.

Leo MacLeod: Yeah.

Brandon Laws: That’s a long time.

Leo MacLeod: Yeah.

Brandon Laws: A lot happens in 10 years.

Leo MacLeod: At least 10 years. Yeah. So in this situation, it’s called Company B. Company B, he already has a future owner. He has someone. It’s actually his nephew.

Brandon Laws: OK –

Leo MacLeod: I mean it’s just amazing. I mean he has got all the components of being a future owner, future CEO. We can talk about that later.

Brandon Laws: And the nephew wants it.

Leo MacLeod: Oh, he does want it.

Brandon Laws: Good.

Leo MacLeod: He wants it. He’s ready. It’s all teed up. So the owner of the firm is working with a financial planner, working with an attorney on the stock transfer, how this is going to work, and then he’s working with me on how he’s going to exit the business and start to relinquish control and how the new owners, because there’s a team of them led by his nephew, are going to take over.

And he’s doing it very deliberately. He’s got a plan and every month we get together and sit down. We look at, “OK, where are you and what do you need to do next?” So a lot of times, for him, his job is like going to Australia or Switzerland and leaving the business for a while and testing it and letting them run with it and seeing how they do because it’s similar to giving your keys to your car to your kid for the first time. You never know how it’s going to work until you test it out.

Brandon Laws: Yeah.

Leo MacLeod: You can’t be there. You need to let him just roll with it.

Brandon Laws: Kind of let them fail a little bit.

Leo MacLeod: Go into the ditch.

Brandon Laws: Probably mitigate some of the failures. But –

Leo MacLeod: Right, exactly.

Brandon Laws: You just got to let them do it.

Leo MacLeod: Exactly.

Brandon Laws: So let’s say you have a small organization where you maybe have an owner or multiple owners where they’re not necessarily involved in the day to day business. So they’re going to keep the organization. And you have a key executive who is basically running the business, but not an owner. They’re retiring. Is that also part of a succession planning process or is it always just based on ownership change?

Leo MacLeod: You do need to look at the team in place. I mean there are very few places unless you’re really small that you’re totally dependent upon one person. You can have an operations person. You can have a financial person. You have a human resources person. People contribute in different ways.

It’s interesting. There are some firms that look a little bit more towards how are they going to replace the team rather than the person. So what they will do is they will start developing kind of a – the bench to take over for the people on the field. Very much like basketball or football. It’s like, OK, we need to bring in our second team. So those people are warming up and they’re getting ready to enter the game and they’re slowly taking over the responsibilities. I’m just thinking about a firm I’m working with now that’s very flat. I mean it’s – oh, I don’t know. Maybe it’s three – under 400 employees.

Brandon Laws: Wow. But it’s more flat. So the team is more important than any one person.

Leo MacLeod: Right. I mean they’ve got a corporate management group of about eight people, right? So they’re a multidisciplinary firm. So they’ve got people who are representing different parts of engineering and architecture and construction for instance. So they’re making decisions as a group as opposed to just one person saying this is what we’re going to be doing, which becomes challenging but it’s – you also have that safety in numbers because if just one person leaves – if you have one person that leaves, it makes it easier to make decisions.

But it makes it stronger too. So they’re looking at developing their bench for people who can sort of support them as they move into a senior leadership role. And if they leave, and they will at some point, you’ve got a number of people who are going to be coming up and taking their place. Does that make sense?

Brandon Laws: So when you think about an overall succession plan, especially in the early stages, how detailed does this plan need to be? Is it just here’s my vision for the future? I want to get out in this many years. What does that even – what does it look like? Is it really a plan or is it just sort of –?

Leo MacLeod: Yeah.

Brandon Laws: We’re going to take it one day at a time and take some incremental steps.

Leo MacLeod: Yeah. Let me tell you about the process that I use because I feel like it’s so personal and it’s so unique that I know that there’s probably consultants who have templates and flows and you need to do this and this and this. I think that’s great. But that’s not the way I work. And the reason is because every organization is different and everybody has got different pain points and different things that keep them up at night. Different things on their mind. So rather than trying to direct him down my own little model. You got to do this first.

Brandon Laws: Step one, step two.

Leo MacLeod: But as they’re going it, they’re thinking, “Yeah. But what about this thing that keeps me up at night?” So what I hear –

Brandon Laws: They can probably find that out.

Leo MacLeod: Yeah. What I do is I used to take a huge wall, like a big blank wall and I give people huge Post-it notes and I say, “Just tell me what’s on your mind. What’s your concern?”

Brandon Laws: Yeah.

Leo MacLeod: You get one concern or one question per huge Post-it card. I mean these are like five-by-eight Post-it cards and we just put them up on the wall. Throw them up in no order and then I say, “All right. Why don’t you rearrange them into buckets that make sense?” because that’s the way our mind works, right?

I’m just directing. I’m just sitting back and letting them figure this out. Once they put it into different buckets, here’s what ends up happening. They end up having questions about their own personal life, about where they’re at now. They end up looking at questions about their future, about their health. They start looking at their financial situation. Are they going to have enough money? That’s sort of one bucket.

Brandon Laws: That’s interesting, yeah.

Leo MacLeod: But then they have another bucket. It’s like, well, do I have the right people in place? Have I been clear with them about the expectations I have? What kind of support do they need? Do we need to add new people? Do we need to hire new people? How do I – then we have the financial part – how do I afford to get out of the business? What do I want out of it? How do I make it fair to people? Can they afford it? What about the tax implications? Do I need to talk to an attorney? Then the other bucket is really just about maintaining the business right now. Because it’s very much like a relay race, right? You’re running around the track. You’re the owner and at some point, you want to pass that off to someone else. What’s required to do that is that the person who’s taking the baton needs to start running.

Brandon Laws: Start running at some point. Yeah, that’s a great analogy.

Leo MacLeod: And then pick it up. So it needs to be a smooth transition because the business needs to generate revenue. It just needs to make money. It doesn’t have the liberty of saying, “Hey, you’re going to go through a succession plan. Why don’t you just tell your clients you’re not going to be working with them for a while until you figure this out? And then you will pick it up.” I mean that’s not the way it works. It needs to be continuous.

So in order to do that, you need to be thinking about all this stuff and planning it as you’re doing the business. That’s particularly difficult these days because people are so busy and they’re making money as opposed to back in 2008, 2009 when there was a recession. So there is a – almost a mad rush to capitalize on the strong economy right now and people are kind of hanging in there because they want – they’re making money.

So the challenge that I have is being able to pull them away from making money, to think about planning to get out of their business.

Brandon Laws:  In this whole discussion, I never would have really thought that one of the big components to this is stepping out of the business and focusing on their second life or their – the life after business because for a lot of these people, I’m sure it has been their identity for so long.

Leo MacLeod: Right.

Brandon Laws: Not only has it been their source of income and they got to figure out how they’re going to pull that money out or how they’re going to fund their retirement. But also they probably worry about the health of the business after they leave. They don’t want it to crumble. They built it.

Leo MacLeod: Exactly.

Brandon Laws: They don’t want it to crumble. What keeps them up at night the most out of all that? When you see people put those Post-it notes up on the wall, what is always there?

Leo MacLeod: I think that people are concerned about where they’re at right now and I think people are really stressed that they’re working so hard and –

Brandon Laws: So they worry about their health or something.

Leo MacLeod: Yeah, they worry about their health. They’re worried about their balance. They’re worried about, “Am I going to be able to stop? Can I just jump off this treadmill?”

Brandon Laws: Interesting.

Leo MacLeod: Because they’re going so hard. Can I adjust to like not being on so much? You know, my wife just – she left a position, a senior position. She’s not going through her own succession plan, but she’s going through a little bit of a change in life and she left a very demanding job. She says, “I’m just going to go to Europe and I’m going to walk the Camino de Santiago in Spain.” This is like 500 miles. And she ended up walking like 420 miles by herself.

Brandon Laws: That’s incredible.

Leo MacLeod: But when she did that, when she took the time for herself to just be out in the middle of nowhere, it really changed things for her. It changed her perspective. Why am I mentioning this? Because I think that when people are so caught up in running their business, that’s where their heads are. They can’t really think about what it’s like not to be in their business. But that kind of keeps them up. Like well, am I going to be OK not having this thing that has been part of my life? It has been part of my identity.

Brandon Laws: Yeah.

Leo MacLeod: What my wife found was that there’s another life out there, of just experiencing life without being identified – identifying yourself so strongly with what you do.

Brandon Laws: I love that. I want to talk about a couple of technical things. The process. When you’re looking for somebody to step in to that ownership role, to sell the business to, somebody to take over that key role, are you looking internal, external, a combination of both? What’s that whole process of finding somebody and identifying? And how far in advance should that happen?

Leo MacLeod: Yeah, that’s a great question. It’s always easier to find a good internal candidate. And the reason is because the team will accept that person.

Brandon Laws: That’s a really valid point.

Leo MacLeod: Right. You can go ahead and try to find a rock star and bring in the rock star.

Brandon Laws: People may jump ship because they don’t –

Leo MacLeod: Oh, totally. Like who are you? Now you’re going to tell us how to run the business. What do you know?

Brandon Laws: So it’s your way or the highway?

Leo MacLeod: Yeah, right, exactly. So that usually doesn’t work that well. If you are going to bring somebody in and firms do need that, you want to make sure it’s like – I don’t know. There’s no magic formula here but you want to make sure it’s maybe like five years, right? You want to give people enough time to adjust and accept this person and you also want to give that person enough time to not try to push things too much. You know, to kind of lay off the gas.

Brandon Laws: Yeah.

Leo MacLeod: And not assert themselves too much because when you’re coming to an organization, I think you need to be more deferential to the way things are, the way that culture is, and it’s especially true of a culture where people work well together. You need to find the right kind of fit. You need to spend some time and interview people and make sure that they’re going to fit within your culture. They’re not just the right fit because they have the skill set or the experience.

Now, having said all that, there are cases where there’s a big shift where people just will bring in the new team and they manage. I am always surprised, by the way, at how firms can be resilient and live on, even with a lack of planning.

Brandon Laws: People or humans can adapt easily.

Leo MacLeod: Very much, and clients do too.

Brandon Laws: That would be the scary part, I think. It’s like, oh, wow.

Leo MacLeod: I agree. I have seen so many firms. I’m thinking of a firm where all three of the owners basically threw the keys on the table and said, “The firm is yours. I don’t want anything out of it. I haven’t done any planning. But I’m burned out.”

It was left to basically one person who was a principal in the firm and he goes, “OK. I will just try to make this work,” and he just – he scraped together, probably took out loans, just to try to make payroll for his team. Kept the team. People stuck around. And you know what? A year later, they had a Christmas party, an open house. Like hey, we’re still around. The place was packed and it was really interesting to me. People buy from people. That’s it. People buy from people. They buy from people they like and they trust.

Brandon Laws: Yeah.

Leo MacLeod: And that’s the core of it. We like to think it’s just maybe the key people at the top, but frankly a lot of those people who are providing the experience.

Brandon Laws: When somebody is identified and you decide to bring them into the organization, what kind of role do you bring them in as, if you’ve identified them as a potential owner? Do they come in as an employee and then they’re really in kind of a performance appraisal period? How does that work? Do they come in as an owner right away?

Leo MacLeod: No, I don’t think so. I don’t think so. That’s why when I listen to that scenario, I automatically bristle because I just think that people will just – will reject them. It will be like the body will reject it.

Brandon Laws: I agree, because it is – it’s a foreign object.

Leo MacLeod: It’s a foreign object. I’m trying to think of scenarios where that has gone well and –

Brandon Laws: So you’re going to ease them into it –

Leo MacLeod: Yeah. I just think it’s – there are too many disasters that I can think of where it just didn’t go well. Hey, I’m going to bring in this guy. I think he’s going to be able to run this place. I’m like, “Yeah, OK.” It just doesn’t seem to work out that well. There are just more car wrecks than there are –

Brandon Laws: That’s an interesting point because I was – one of my follow-up questions to all that was going to be, “Does it ever not work out?” and it sounds like that’s absolutely true.

Leo MacLeod: All the time. I mean I had a buddy of mine who ran a high-tech company in California. Very successful. Had an operation in Toronto and one in Australia and he was doing – you know, I don’t know, I think CPUs or something. It was a high tech firm, basically kind of a manufacturing firm. Very successful. And he just pulled the plug on the business, just sold all the equipment and wrote people a check.

Brandon Laws: So instead of finding a successor, he just decided to sell.

Leo MacLeod: Which I think is smart because there’s a lot of headache with trying to find an owner to keep this thing going. I mean one thing that people don’t realize is there’s nothing wrong with saying, “OK, I’m done with this business and I’m out of here,” because he doesn’t have any – well, I don’t know if he has any worries but – I don’t know if he has any regrets. But he did it cleanly.

Brandon Laws: Yeah.

Leo MacLeod: Right?

Brandon Laws: I would think like the hardest part about that would be destroying those jobs essentially, all the employees.

Leo MacLeod: Yeah, yeah, exactly. I think that was hard. But you need to let go anyway because if you’re no longer the owner and someone else is the owner, then you have that – then you feel like, “Oh, how is the firm doing?”

Brandon Laws: Exactly.

Leo MacLeod: Are they treating the employees right? It’s nice to keep people busy. But think of this. I mean those people – well, hopefully, they will find other jobs.

Brandon Laws: Yeah.

Leo MacLeod: But you do need to think of yourself first in this whole business of succession planning. You need to think about, “What do I want out of this deal?” The firm that I was talking about earlier where the guy is being very intentional, he is incredibly fair to his employees. He wants to make the stock very reasonable. He started to give it to them incrementally over time. He’s starting to do this. But I’ve actually been coaching him and advocating for him, saying, “Make sure that you’re not too generous, that you’re taking care of yourself too.” So anyway, it’s a balance.

Brandon Laws: Yeah. When will an owner figure out – like if they’ve identified somebody. They’ve sort of been there for a little while. They’ve seen them in action, see other people reacting to this person. When do you sort of know that this is the right fit? It’s time for me to get out.

Leo MacLeod: Yeah. Well, that’s the great question. No, that’s my work right there.

Brandon Laws: That is your work. So your work is in identifying when that time period is.

Leo MacLeod: Yeah, yeah.

Brandon Laws: What do you usually say? Like hey, I think you’re ready. I think it’s time. Do you check? Do you have a list? Like all the boxes are checked. All of them are checked.

Leo MacLeod: I do. I have assessments I’ve come up with. I’ve got a matrix of different things to look at. And I coach owners on having clear expectations of folks and then I provide training and things like emotional intelligence and time management and managing people and business development.

All those skills that are real in strategic planning, all those things that you need in order to be really an effective leader, I’m teaching those people. I think the difference is how willing are they to take on the risk? Because it’s very stressful to think about jumping into a position of owning a firm and being responsible for it, as opposed to just wanting to financially gain from it and be at the table and call the shots. I mean the reality is that people who own firms, they’re personally underwriting the business. If things happen, then you come after them.

Brandon Laws: Absolutely.

Leo MacLeod: And they’re usually the last person to get paid when things are bad. I mean right now, things look good because the economy is strong. But everything is in a cycle. You don’t know. You’re taking on that risk.

Brandon Laws: Yeah, we do.

Leo MacLeod: Yeah, exactly. So for me, here is the key question. This is what I have people say. This is the way I have owners ask their kind of key people, the people who they see as maybe future owners. Why do you want to be an owner?

Brandon Laws: That’s a really good question actually.

Leo MacLeod: Yeah, it’s the only question. Why do you want to be an owner? What’s your motivation? If they say, “I want to be able to pick and choose my work,” nah. If it’s –

Brandon Laws: Or money-driven.

Leo MacLeod: Or money or something like that. But if it’s really about I want to create a place, I want to create a legacy, I think that we could do some exciting things here. If they’re really attached to the idea of a bigger idea and really wanting to help other people instead of themselves, then it’s going in the right direction. The second part though is – I work with another firm. I work with a lot of engineering firms. I work with another firm where – it’s a very small firm and the owner said, “I’ve got somebody who I don’t think could be a future owner. But she’s interested in becoming an owner.”

Brandon Laws: Oh. So you were basically brought in to assess that out and –

Leo MacLeod: Exactly. So I met with her and I said, “So why do you want to be an owner?” Right? And she said, “Well, I want to be able to have input on who we hire and want to be able to look at the financials and have more involvement in running the business.”

Brandon Laws: It’s all about being a COO instead of –

Leo MacLeod: Right, exactly. So I say, “OK. Well, tell me about your life and your objectives. Are you interested in the risks of running a business?” I mean in other words, do you want to put in the long hours? Well, no, not really, because she has a kid. So work-life balance is important. I said, “OK. Well, how about financially? Because it’s going to require you to write a note to buy the business and buy stock and be responsible for other people.” Yeah, I’m really not interested in that.

So you could already see through that conversation. You’ve got somebody who wants to be involved, who’s very important by the way, but is not a future owner because of the risk profile. She doesn’t want to do that extra work and I respect that. But we need to find a way in keeping that person engaged and employed because they’re very important.

The distinction is that any company has got people who are really important to the health of it, they’re not all future owners. So you need to keep those people involved. But you don’t need to make them owners. And one of the challenges or the problems that I see is that people say – companies’ owners will say, “I need to keep this person around. So I’m going to make him an owner.”

No, just like give him more money or give him more responsibility or give him something other than a piece of the business.

Brandon Laws: Yeah.

Leo MacLeod: You don’t want to put him in a position of owning it or running it, if that’s not part of the plan.

Brandon Laws: Yeah. It’s a good illustration. Leo, there’s a couple of reasons I wanted to do this podcast. For one, we have owners listening to this podcast and they may have toyed around with the idea of “I need to get out of this business at some point.”

So I wanted to give them some tools. But we also have a large audience of HR people and I think oftentimes that succession planning topic probably pops up in their world a little bit. Maybe they’ve been talking with the owner. They have a seat at that table with the executive team and that’s probably come up and it probably falls to them at some point. We need to provide them tools.

So with those two groups in mind, where is a great place to start, if the succession planning topic has come up? Where do you even start with all this? Is it calling a guy like yourself? Is it exploring, fact-finding?

Leo MacLeod: I think it’s fact-finding. I don’t think it’s a bad idea to start talking to some professionals. I mean whenever I’m sitting down with someone, I will say, “Have you talked to an attorney?” because an attorney is actually really important in this whole mix.

Good attorneys understand the financial parts of it too by the way. They understand the different options for transferring the business and the financial implications. So it’s not – they’re just not an attorney in terms of the legal part of ownership. But they understand the financial part of it too.

It’s good to have somebody who can kind of help you understand the bigger pictures in terms of what’s called a bottom line. I also think that for an HR person, they can at least start those conversations like I’ve talked about earlier.

What do you want to get out of this? What’s your timeline? What are your concerns? What are your questions? What’s important to you at the end of this? Do you want to – is it important for this business to stay in your name or stay the way it is? Are you OK with selling to someone else and just relinquishing control or leaving?

I mean just starting the conversation because it’s a number of conversations that you need to have with people. It’s not one conversation. As you get information, you realize – your thinking changes.

Brandon Laws: Yeah, good point.

Leo MacLeod: Yeah.

Brandon Laws: Where can people find you?

Leo MacLeod:

Brandon Laws: People connect with you on LinkedIn, anywhere else?

Leo MacLeod: Yeah, LinkedIn is fine, absolutely.

Brandon Laws: Well, Leo, it has been a lot of fun. This has been a great topic. I’ve enjoyed the discussion. There’s a lot more to it than I would have ever thought. So I appreciate you shedding light on all that.

Leo MacLeod: Yeah, thank you Brandon. I appreciate it.

Brandon Laws: You bet.

Brandon Laws

As Director of Marketing, Brandon Laws leads all marketing efforts for Xenium, providing oversight on all marketing campaigns, digital marketing strategy, events, sponsorships and public relations. Brandon brings a positive energy to every aspect of his role at Xenium—from internal initiatives around culture and wellness to industry thought leadership through the Xenium podcast and other social efforts. Active within the HR community, he currently volunteers on the board of the Portland Human Resource Management Association as the Director of Marketing & PR.

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