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What Happens When It’s Time to Walk Away from Your CI Business?

With the passing of George Feldstein last week, it got me to thinking about succession planning. (Image via Thomas Barwick | Stone | Getty Images)

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With the passing of George Feldstein last week, it got me to thinking about succession planning. Mr. Feldstein was a pioneer in our industry and will be sorely missed. He was the sole owner of Crestron and the driving force behind the company. Unfortunately Mr. Feldstein had been ill for a while, but that did allow him to plan for the future of his company; last March Randy Klein was named president and CEO to allow for a smooth transition.

That got me to thinking about what would happen to my company if I became ill (or worse) or if I won the lottery and no longer needed to work. How many times has a new client called you and when you inquire about the existing system and the integrator who set it up, have you heard them say something along the lines of “he moved away and closed up shop?” Not only is that bad for the client, but that integrator spent years building a business and a client base and just walked away from it.

It got me to thinking that there should be a better way.

Every company, from GE down to the smallest integrator with just an owner and an installer or tech should have a succession plan. You should be asking yourself, for every critical position in the company, what happens if that person wins the lottery tomorrow and quits? Not only is having an answer for that question good for the employees of the business (because they have some confidence the business had a life after the owner) but it makes clients more comfortable that the business will be around to service them in the future.

Take a long hard look at every position in the business and understand how you will promote people upward or move them sideways or hire externally if someone resigns. As for yourself as the owner, who will take over for you if you choose to retire, in six months or 30 years?

If someone is going to take over your business, with all of the relationships, clients, knowledge and goodwill you have built over the years, there is a huge value in that. Put together an agreement with the person that will taking over the business. While they may not have the funds to purchase the business outright from you, you can set up and earn-out, whereby they pay you a set dollar amount or a percentage of revenue or profit each year or month. That way you have some skin in the game to help transition them, and they have a way to become a business owner even if they don’t have the savings to buy it outright.

Spend the time to set up a succession plan and ensure longevity for your business and your employees. And ensure some revenue for yourself in retirement.

What are you doing to plan for your company’s future without you? I’d love to hear back from you in the comments section below.

+Todd Anthony Puma
is president of The Source Home Theater Installation, Powered by Fregosa Design, in New York City.