March 30, 2021
You see examples of it every day – the sign turned from “Open’ to ‘Closed for Business.’ Store windows once filled with goods for sale now empty or covered with brown paper, another business gone.
It’s tempting to think poor management or marketing, says a successful businessman, but all too often it’s something else entirely -- the lack of succession planning, developing a strategy for identifying and developing future leaders for the company to ensure that a business can continue when its founders are no longer there.
Real estate legend Mario Carey, a man who has handled nearly $3 billion in transactions over a 35-year career and heads three companies, says lack of planning ahead for the time when a current owner gets too old to manage effectively, wants to retire or passes away all too often is “the nail of the coffin of a successful business,” Carey has seen the impact firsthand on properties that become vacant or are suddenly listed for sale at below market value.
“It’s heartbreaking,” he said. “It’s especially apparent in smaller economies like The Bahamas where the first generation of a family works really hard, builds a business, establishes other branches or locations, and perhaps the second generation takes over but with slightly less ambition than the original owner. By the third generation, family members have moved on. They are no longer interested. But the last owners did not plan effectively for what would happen if they wanted to retire or if they were suddenly unable to continue working. So all those years of hard work and long hours and reinvesting in a business are just left out there, with no future unless someone comes along miraculously to save it.”
Carey believes that the search for a CEO should start five years before the current CEO expects to resign by choice or contractually. Yet, a recent survey by the Canadian Financial Executives Research Foundation found that in Canada, more than half of all companies “were unable to name a successor to their CEO should the need arise.”
Studies have repeatedly shown that lack of succession planning is second only to insufficient capital in causing small businesses to fail.
“While the problem is nearly universal throughout Western civilization,” Carey said, “it is particularly bad in The Bahamas. We are inevitably poor planners just as we are poor savers. We still lack a national development plan and, in business, we tend to have a more laid-back approach to the future. Too many are absorbed by meeting daily deadlines, logging billable hours or satisfying immediate demands instead of taking the time to plan for continuity.”
Carey, founder of Better Homes and Gardens MCR Group, the first international franchisee of the household brand, and more recently, Mario Carey Ventures (MCV), advising on, structuring and partnering in a broad range of innovative businesses, compared the refusal to plan to the reluctance to create a will.
“Denying is not defying,” said Carey. “Preparing a will does not invite an early death. It just means less fighting among siblings or other interested parties when you do pass away. Having a succession plan does not make you irrelevant. It means you can be at ease knowing that the business you built will continue as you enjoy the next phase of your life.”
Carey followed his own advice. In the past two years, he has taken on two younger partners, both of whom met the standards he believed would take the Better Homes and Gardens flag to new levels through intensive social media marketing and personal client relationships.
“There is no need to hang on to something because it was once your baby. Businesses grow up, just like children. They take on a life of their own which can continue to be success stories so long as the right management is in place,” he said. All it takes is planning and execution, expertise he now provides to others through MCV. “It’s overcoming your fear of letting go and adopting an excitement about what exploring the next chapter of life while enjoying the knowledge that the sign on the door will continue to say ‘Open for Business.’”