Having a small business succession plan is key to ensuring the longevity of a company. Should the owner die unexpectedly, become incapacitated, or wish to retire, the plan spells out who is to take over management/ownership and possibly a directive for the future. According to a PricewaterhouseCoopers 2021 U.S. Family Business Survey, only 34% of small business owners have a documented and communicated succession plan in place. We asked three local owners to share what they’ve done on this front: Elizabeth Pooley, owner of Square Donut; Larry Goertz, president of Blade Masters; and Dean Jessick, president of SGH Concepts.

B2B: What is your business? Who are your customers? How long have you been in business?

EP: We are a woman-owned retail doughnut shop serving scratch, gourmet doughnuts (including vegan varieties) and coffee. We have one location in Omaha and employ a staff of 18. We opened for business two days before COVID-19 (pandemic was declared) in March 2020.

LG: Blade Masters, Inc. is a family-owned business that specializes in excavation, local trucking, and general contracting for its own construction projects. Customer scope is primarily with city, state, and federal contracts. The Goertzs bought Blade Masters Lawn Service in 1996. In 2004, we enhanced the business model, changed the name, and developed a strategic plan for the
sustainable future.

DJ: SGH Concepts has 70+ years in the commercial construction industry. Our focus is as an architectural specification firm that sells and installs products and provides services after the sale.  We find solutions for architects, business owners, developers, and general contractors that will meet their needs but sustain time. Presently, I am CEO and have been at the helm for 35+ years.

B2B: Do you have a succession plan for after you leave the company? When was it established? Did you put it together on your own, or solicit help from an attorney, CPA, financial adviser, etc.?

EP: It is my hope that my son, Jack, will take over all of my businesses someday. (No date is set.) I put a plan together on my own after discussing details with my son. We are moving toward getting everything finalized legally through my attorney.

LG:  We have ideas; however, nothing official. We hesitantly discuss the what-ifs. We have competently skilled employees to run the daily operations. However, we could be in a jam if someone else had to unexpectedly step in, as there are many unseen components of the business, such as personnel, bookkeeping, and securing future contracts through a competitive bidding process. A reason for not having a succession plan is likely due to the busy nature of self-employment while juggling jobs, repairs, people, and time. At the end of the day, we could be thinking about where to get an airbag after hours, or if we have enough truck drivers for the next day, which doesn’t leave much room for succession planning.

We had one consultation with a lawyer and another with a financial adviser to discuss options. Most of our plan is on legal-sized yellow notepads, hand-written.

DJ: After talking to quite a few succession planning gurus, our planning began in 2016 when we took our first steps with various consultants to help us form an ESOP (employee stock ownership plan) and give our employees an opportunity to own a piece of their company and to grow their retirement savings. Through third-party advisement, we engaged ESOP consultants, CPAs, ERISA attorneys, ESOP Valuation Firm, ESOP Trustee, corporate counsel, and ESOP banking relationships. The ESOP is an ERISA retirement plan, so there is a formal plan document with multiple parties engaged annually to help us independently value and distribute shares equitably among our eligible employee participants.  

B2B: What was the most difficult aspect of the planning process for you?

EP: I don’t feel that this was a difficult decision or execution of my plans.  However, I do leave it in the hands of my son in the future to decide if he would like to keep the family businesses or sell them.

LG:  Considering all the documentation is overwhelming when creating step-by-step instructions on one hand, and securing the safe financial future of Blade Masters as an ongoing family legacy on the other. Indeed, a succession plan needs to be finalized so that our successors don’t have to face the headaches of legalities while trying to take on the role of leading the company. Knowing what a burden it could be to them is what motivates us to make it a business priority.

DJ: The hardest part of this process was to determine the best path for a legacy so that the former owners could retire knowing that the folks who worked for them would stay on and could handle the operations of the business without them. It tested us, our processes, our people…ESOPs are not a “get rich quick scheme” but a gradual increase to the dollars inside of your retirement account over the time you stay employed.

This article originally appeared in the August/September 2022  issue of B2B Magazine. To receive the magazine, click here to subscribe.