More than 30 years ago, Allison Barlow's mother Marilyn turned her agricultural degree into a flower seed catalog company run out of the family home. The business has since sprawled from a kitchen table operation to a key supplier of rare and specialty flower seeds and plants throughout the Northeast and Midwest United States. But planning for the future is proving to be a challenge.
Sometimes it feels like the business has exploded from its humble roots, says Barlow with a laugh. “I'm trying to rein it back in." Although she's tackled chores at the business since she was a child, Barlow moved back from New York to the family house in Connecticut four years ago to join the company full-time as director of operations and take on some of her mother's duties.
The unofficial plan was to allow her mother a semi-retirement of sorts, or rather the opportunity to focus on the parts of the business she enjoys while the younger Barlow takes care of the day-to-day elements, like running the website and catalog, tackling payroll, and looking after human resources.
But they've yet to put a formalized succession plan down on paper. “It was a loose plan to begin with, but it's seemingly a little tougher than we had thought, mainly because her expertise is needed," Barlow admits. “There's more work than she necessarily wants to be doing."
The biggest challenge, says Barlow, is retaining that rich trove of specialized knowledge her mother has accumulated over the past three decades, especially as the elder Barlow looks to step back from the business. Things like what type of fertilizer to order or when to bring in predatory wasps to tackle aphid infestations. “All that knowledge … you just don't have it organized mentally and you can't possibly give that to somebody in the same pattern," she adds.
Planning for the future
While the hurdles of succession planning can feel enervating at times, Barlow's company isn't alone.
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According to The EIU research, 59 percent of younger1 Americans surveyed say they were expected to take over the family business.
A fear of losing all that trade knowledge developed over the years is a common hang-up for family-run businesses when it comes to planning for succession, says Nora Yousif, a financial advisor with RBC Wealth Management-U.S. in Easton, Mass.
“The big challenge is letting go," Yousif says. "Feeling confident the next generation can take over and giving them the wherewithal to be able to learn on their own."
Yousif, a third-generation financial advisor who still works alongside her stepfather, Kevin Williams, and step-grandfather, Avery Williams, says she knows first-hand the importance of putting a succession plan in place. And it's a message she's constantly trying to communicate to her clients who run their own businesses.
“It really has to be in writing," says Yousif. “Not just for your business' sake but for your clients' sake … what if something happens to the older generation? Then what? There definitely should be some basic planning."
The 2017 RBC Wealth Management Wealth Transfer Report found just 39 percent of business owners have a transfer plan in place.
The idea, says Yousif, is to turn an honest discussion into a concrete plan, one that includes expectations from both the current generation and the generation taking over, as well as how to carry the “common thread or goal of the practice" forward. In addition to examining how to prepare clients for the changeover in management, a succession plan should also look into legal and financial considerations like retirement income for the outgoing party, sales agreements, and tax implications.