Succession Planning in Independent Retail

What happens next?  It’s on everyone’s minds.

Succession planning in Independent Retail.

By Terresa Zimmerman, host of Main Street Matters & founder of Wood Underwear

Before I started my apparel business, I tried to buy a retail store. This was a store I loved, in a mountain town I frequented. Any time we were down the road at a favorite restaurant, usually having margaritas, my husband would disappear for a minute and come back with a small gift from that store. At one point, I started conversations with the owner about buying her store. We shared financials, even started talking deal terms and pricing. Then she stopped answering her phone. Dozens of calls, letters, emails and 2 months later, I found she’d closed her doors and shut down the business. The puzzle I pieced together was two-fold - her financials weren’t ready and it was too emotional for her to have someone else own it. She did what she felt she had to do, but for the rest of us, the hole she left on that prime corner was felt for years. She was important. Her store was important.

When retailers gather, the conversation is primarily around running the business day to day, planning the next buy, merchandising, staffing and all the many things that make up the operations of a business. There is almost always an undercurrent – Succession.  It comes up in conversation as a side note, as a by product of another point, but mostly it hangs there as something to deal with later. But what happens to your store when you are either not there to run it or would like to move on to whatever is next?

It's not just about you.

Well, it is about you, but you know that’s not the whole story. Your store plays a role in your community, in its culture and in the relationships you and your store are vital to nurturing. What happens to your community if you just shut down?

There is value in what you’ve built.

The relationships nurtured and the repeat business year over year take time and experience – invaluable. Many of you have cited 60-85% of your business is repeat. Consider the cost of customer acquisition for a new store and the time required to earn trust. You have earned value to realise, with some planning.

Think about legacy.

Independent retail stories are full of history and richness, multi-generational hand-offs and hand-overs. The times and trials store owners have conquered! From face-offs with Mother Nature to world financial crises to just bad bouts of business decisions. You have learned lessons from those moments that you have carried forward and built in to how you operate your business. You can’t recreate that richness overnight…nor the pride of accomplishment of seeing your business carryon after you aren’t in it day-to-day.

Promote business investment opportunities.

There are opportunities out there that no one knows about until we start talking about them. Cindy Purnell, owner of Post & Rail Men’s Shop in Ligonier, PA, is talking about it. While she’s not ready to slow down, she admits to feeling limits and wants to continue a proud legacy. “We're going to be 50 years old this year. It’s a lot to be proud of. At 78 years old, I want this store to continue. I'm hoping somebody picks up the phone and calls me or walks in the door and says, I'd really be interested in owning this store.” It’s really hard to slow down and give succession the proactive thought and attention it deserves. It means acknowledging there will be a next chapter for you to think about…and then you have to do something about it.

Work-to-own training and apprenticeships.

There is job training, apprenticeship and work-to-own positions out there that can simultaneously help you with staffing, as well as provide aspiring business owners a way to learn and earn. Ron Brodeur, proprietor of Brodeur Carvell in Fort Myers, FL, talks about training someone into the business. “I'm willing to train somebody. My main goal right now is finding somebody who believes custom is the right side of the business for them to go into. They would be learning my business and my trade. The market is growing. The right person would grow as the business grew. Ideally, somebody who can see this as a career, not just a job.“

Friends and family development.

A family member may be interested. You don’t realize it because you haven’t thought or talked about this part of your business yet. If you’re lucky, you’ve got an inspired family member who finds passion in your business and has already found you. Danny Reynolds, owner of Stephenson’s of Elkhart in Indiana talks about working with his daughter. “One of the most exciting things for me is that my daughter has now come into the business. Unlike me, she knew from the time she was five years old, that she wanted to do this. She has retail running through her veins and brains I never did. Together we make a pretty dangerous team. It's fun that we get to work together.”  If you can, start talking about the opportunities and your intentions. Once the topic becomes something you initiate, someone may surprise you and step up.

Find an Expert.

There are experts that can help you understand options that put you in the driver’s seat so you aren’t just waiting for succession to solve itself…and there is a matter of paperwork. A good start is your CPA or financial planner.

We want more independent stores around. The personalized service. The relationship based business. The community bonds and foundations. The benefits to us all are resounding.

Planning for the next stages of your retail business is hard, intentional work and preparation can take years. Who has the time? Where do I start? My kids aren’t interested so what are the options? I don’t need to think about that yet. I’m not ready to retire or do something else. I’ve got time to figure it out later. Start talking about it. Later is now.

Reference links

The Small Business Owner’s Guide to Succession Planning

Succession Planning For Owners Of Small And Medium Businesses

Webinar | Retail Succession Demystified: When, Why and How to Prepare