SME Succession Planning in Canada

Succession Planning Glossary Succession Plan for Nadia La Russa Best Practices Survey Results When it comes to corporations and businesses of any size, succession planning is something that can and should be planned out in advance. As cited pervasively throughout the rest of the report, the following can all be asserted and proven. The need for succession planning is needed in all countries including Canada, the United States and in any other developed country in the world.

Succession planning has different meanings and takes on many forms depending on what country the business is located in, how large the business is, who runs the business, who owns the business and what the long-term plans for this business happen to be. Indeed, most large firms have entrenched and very specific succession plans in place that center on promoting the best and the brightest in the firm so as to continue the pathways and positivity that the firm exemplifies.

When it comes to small to medium enterprises (SME's), they tend to be much smaller in terms of executive structure and they are quite often family-oriented. Even if other qualified people are present and around the business, ownership usually stays within the family. Regardless, there needs to be a defined succession plan in place so that the business can continue to operate and function properly when people exit the business due to retirement, voluntary departure, death or disease.

However, just picking a random employee or family member is less than wise. That person has to be screened, groomed and otherwise prepared to lead the firm. If the prospective person cannot or will not continue the themes, plans and convictions that are desired by the current ownership, then someone else should probably be selected. This report will cover succession planning as a general topic and then there will be a focus on the Nadia La Russa family of companies.

Indeed, they all operate quite well but are dependent on each other and they reside in a specific corporate form. Thus, it is important for any successor executive or owner, family or not, to know how the business needs to and should progress and improve over the years. After a quick summary of how Nadia La Russa is currently comprised, there will be a succession plan offered to help Nadia La Russa continue to grow and operate.

This growth can manifest in the form of more revenue, more sub-businesses and perhaps even business units that are self-sufficient and able to stand on their own. This is not the case right now with any of the sub-businesses but overall directions are good. Of course, all of the above will be coupled with proper research techniques and a proper literature review. Chapter II - Introduction Succession planning may seem like over-emphasis on not much of anything to a lot of people.

For "mom and pop" organizations and one-person operations, this may largely hold true. However, for businesses of any size or complexity or for businesses like Nada La Russa which are multi-faceted and multi-dimensional, then succession planning is something that can and should be taken seriously and the ongoing operations of the firms that make up Nadia depend on it. Since one business openly and clearly relies on the other, the inactions that happen in one of the child corporations will have an effect on the others.

As noted in prior work, Nadia La Russa Enterprises is an umbrella company that has six different operating entities. Each of the six entities is in a differing stage of development. Those entities are as follows: Signature Financial Services: This is the bookkeeping and accounting firm that is under the Nadia La Russa Enterprises envelope. They specialize in offering customized solutions for home, small and medium-based organizations that do not require a full-time bookkeeping staff.

For example, if a small firm wanted to hire someone to do tax filings or sales tax audits but did not want to hire that person as an actual full time (or even part time) employee, they would typically hire a firm like Signature Financial Services to do the work. Ottawa House: This is a co-working space that allows for home-based businesses to enjoy the options and amenities that regular offices get to enjoy.

Further, the home-based people can get the use of these benefits without the overhead and other headaches that would typically be associated with maintaining a physical office that is not based in a home. This would include things like copiers, fax machines, supplies and so forth. It would also include the cost of separate phone lines, internet and service contracts for equipment such as copying machines and other items that a regular office person may not be able to fix and maintain on their own.

Also, there are the separate utilities that are sometimes included in the rent amount for an office but this is not always the case. Such a virtual office also allows for collaboration between business professionals as well as potential networking partners. Zoom Courier: This is a local-based courier that specializes in professional appearance, guaranteed delivery by firm deadlines and the use of "green" options such as low-mileage vehicles, optimized routing and schedules so as to minimize gas usage and so forth.

This would be a blend between the traditional couriers that exist in the business and commerce space and the modern ideas that dictate that sustainability and conservation are no longer optional or discretionary for any modern business. This is true in Canada as well as anywhere else in the civilized world. Granite Towncars: This subsidiary of Nadia is intended to be a middle ground between low-end and conventional taxi services or even buses and the high-end personal cars of the corporate type.

This service allows people to rent personal cars without necessarily renting an entire limousine at a cost that is more than taxis and other lower transportation but not too high as to preclude people that are seeking something in the middle. It is a blend between the flexibility and professionalism of a limousine service but it lacks the inconveniences associated with waiting for taxi cabs and buses. Frank Training -- A "to the point" training service that allows for the training of business professionals and staff.

The nature of the train includes team building, management training, leadership classes, customer service skills and an overall vast array of business-related courses. Frank Training is on the forefront of a type of training that is known as LEGO Serious Play Methodology. Update -- A social media company that permits and allows for business owners to manage and position themselves online in terms of social media presence and online presence in general.

It is basically an outsourcing of the social media management task rather than executives and other assorted internal staff having to manage it personally and internally. This would be along the same line as the Signature Financial Services line of business except that the focus of the service is very and obviously different. Obviously, some of those businesses are very different but they are all closely related in one or more ways.

First of all, any business that needs financial services could quite likely need business training or social media management. As such, the opportunity for internal referrals is enormous. Rather than having no answer for questions about other services or having to refer to external businesses, Nadia La Russa can indeed be a "one stop shop" for more than one service. Other basic business needs such as courier services and car services are also available from Nadia La Russa.

Typically, the Nadia La Russa envelope of services would require the hiring of at least three to four different companies but Nadia offers all six of them. Nadia can also keep an eye on what services are asked for that Nadia does offer and can then make a choice as to whether a new business or expansion of a current one is warranted or could be lucrative.

To come back to the main point of this report, it is clear that businesses that Nadia La Russa runs and operates are multi-faceted and this would mean the management would need to be multi-faceted to match. Of course, no one person or a small group of people could manage all of these businesses alone, let alone do the staff functions of such businesses. Quite likely, each different entity would have to have at least one major executive that oversees the operations and goings-on if the firm.

Further, there would have to be someone to oversee the six component businesses as a whole to ensure that all of them perform as expected and required. Purpose This is where succession planning would come in. Just as Nadia La Russa is multi-faceted, the succession planning would need to be multi-faceted. As stated in the prior-described purpose of this study, the complexity and diversity of these companies requires that a proper and complete strategic plan be implemented so as to ensure the continuing success and operation of the firm.

There is the commonly known accounting principle that it is assumed that the business will continue to operate and exist. As such, this requires people to be identified and groomed to replace the current executives, leaders and owners of Nadia La Russa. The successors chosen must have the ability, skills sets and a desire to maintain the current level and formula of integration so as to ensure the continuing success of the organization.

Bringing on or up someone that is unable or unwilling to commit to this could mean the gutting or evisceration of the Nadia La Russa firm and this should be avoided at all costs. Of course, any "new blood" will tend to bring new ideas to the table and there is not anything inherently wrong with that.

However, good business practices are what they are and there is little to nothing wrong with the current practices of Nadia La Russa aside from the lack of a succession plan that protects the future. Problem Statement The Nadia La Russa organization relies on a series of codependent relationships. These codependent relationships are a result of backward integration. These firms are so integrated, that no single one business out of the six smaller businesses is self-sufficient and thus must rely on the referrals and overflows of the other five firms.

As noted before, Signature Financial and Update will probably send a lot of business back and forth due to the similar outsourcing nature of the two businesses and because many businesses will need both of those services and will obviously prefer to get both services from one vendor if that is possible. Another example would be a courier delivering paper financial records from a client to Signature Financial. This is something that Zoom Courier could do.

It gives revenue to Zoom as the client would pay for the service so the revenue is kept within the Nadia La Russa envelope. Similarly, if a client wanted to come to the Signature Financial office to discuss tax filings or what not, then Granite Towncars could provide the transportation. The client could be picked up precisely when they want to be picked up and could be taken back to their office when everything is done.

Again, it could and would garner extra revenue for the Nadia La Russa business group and would keep external hands out of the process. Given the above, any successor managers need to understand that while there may come a day that the inter-reliance is not an issue, it is absolutely an issue and the businesses should feed each other as much as possible even if that were not the case.

Research Question When a service-based small business grows as a result of backwards integration, what are the effects on the succession plan as compared to product based industries or large organizations? Scope The scope of this project will encompass the above 6 entities, any existing and future staff, management structure. It will exclude the Property Management company, the volunteer Doula Duo business and any entities not currently under operation.

Outcome & Benefits It is anticipated that the operational efficiency will improve as the directors streamline operations, implement frameworks, plans, goals, and timelines for the succession plan. Conclusion The results of this report will have two major sections. The first section will be the results of the open-ended and close-ended survey questions that were administered by the author of this report. The second part of the research findings will be a presented succession plan infrastructure and scope for Nadia La Russa.

This plan is needed for that firm as they do not have a simple and "vanilla" business structure that any common businessperson could step in and just "do" without any training or acclimation. Indeed, someone will have to be pre-selected and then groomed for the role so that they are prepared before the day that they are needed and expected to perform rather than having to learn on the fly and adjust after the succession has executed and completed.

Chapter III - Methodology Just as there are two main parts to the results of this study, there will also be two different sources of information and methodology as it relates to the same. Part of the research will come from the survey mentioned and partially summarized in the two appendices mentioned in this report and the rest will be detailed in the results and findings of this report.

The other main source of the research and results for this report will be through the literature review done later in this report. The surveys and collection of data mentioned in this report as well as the scholarly research from mostly Canadian sources and studies will all feed into the succession plan suggestions and recommendations for Nadia La Russa mentioned later in this report.

As with most recommendations for firms, these will be specific to the Nadia La Russa situation but they can be adapted and usable in many to most other instances. There just has to be some adaptation and customization of the recommendations because a simple template-based or "cookie cutter" approach will not work. Just as an easy example, using recommendations for a services-based business (like Nadia La Russa) would be a far different thing for a manufacturing-based business.

Also, recommendations for multi-faceted businesses (again, like Nadia La Russa) would be very specific to the firm being analyzed and pontificated about. Qualitative & Quantitative Research The author of this report used mostly qualitative research, rather than quantitative research) for this report because using hard numbers and data sets simply does not get the job done. It is true that the surveys can be tabulated and computed in terms of percentage, standard deviations and so forth.

However, a huge part of a succession plan relies on soft skills and traits rather than raw abilities. As such, qualitative research that centers on succession planning will be the primary focus of this research. Literature Review As already noted, an external literature review of scholarly literature is part of this research. A grand total of more than twenty exterior sources were used for said literature review and a point was made to focus on sources specific or published in Canada (if not both).

While the researcher that wrote this report is supremely confident in the abilities present within the researcher, it is good and proper to use exterior resources to justify and offer validity to what is being stated and asserted in this report. Doing a report like this without offering external sources to prove and back up what is being asserted in this report would severely undermine the credibility of this report.

Further, even if many to most of the topics and lessons learned are now inherent to the author of this report, they surely did not come from the author and thus there is some much deserved attribution to the scholars and experts that have "been there, done that" and have proven to be knowledgeable about this subject.

Lastly, even though the author of this report is not a neophyte on this subject, there are others who know much more and thus provide the needed validity that is needed for a report like this. Survey Questions The author of this report, per the appendices of this report, did a survey for a number of business professionals. It was assessed how many businesses they operate, how old they are, what their succession plans are (if any), what their future business plans are and so forth.

The demographical questions were closed-ended and specific answers were sought out. However, there was also some intent in making some of the questions open-ended. This allows the business owners and operators to offer details that almost certainly would not come out in a close-ended survey. The ability to tabulate scores and frequency is mostly to entirely lost but the amount of data that can come from open-ended questions is much higher.

As such, the specificity and tabulation ability for close-ended questions has been blended with the voluminous possibilities of what can be said to open-ended questions. Reliability & Validity There are two hallmarks to any good research study framework and its findings. Those two hallmarks are validity and reliability.

Reliability is the concept that if a random researcher follows the same patterns, does the same research and uses the same structure as a prior researcher doing the same study, the results will be the same or at least close to it the vast majority of the time.

However, if the split between "the same" and "something else" is, let us say, 50/50, than that is a clear indication that the research design is not solid and/or the conclusions drawn cannot be supported given the research and/or data collection done The other hallmark, as mentioned before, is validity. While reliability alone is good to have, one must also have validity.

For example, if someone weighs an item on a scale, one would expect the results to be the same every time you weight something of the same weight. For example, if something weights twenty pounds and the scale indeed says twenty pounds every time the twenty-pound item is weight, then the scale is reliable.

However, if that scale is improperly calibrated and the item is actually twenty-five pounds, then the scale is reliable but it is not valid because the item is not twenty pounds, but rather twenty pounds Chapter IV -- Literature Review This literature review will pull from outside sources and will tie them directly to the Nadia La Russa model and the future implications for the same in addition to the succession planning that clearly needs to occur.

The first source up for review talks about business models and the associated business strategies that can and should be used to perpetuate revenue streams as years go on. For example, the practice of Nadia La Russa and their focus on using one business's traffic to create revenue for another part of the Nadia La Russa family of businesses can even happen internally to one subsidiary or a single business through the sort of thing that Apple Corporation does. Apple could have sold iPods alone and done just fine.

However, they sell the iPods and they have tacked on things like Apple TV, the iPhone and iTunes in a way that Apple gets money for the iPod (or whatever the first item bought happens to be) and they get more and more revenue from that person as the days and years go on.

Put concisely, Apple lures in people with the iPod and then the customer can use the iTunes online web service to buy music, buy movies or any other number of free or for-charge services like podcasts, audio books and so forth. This stands in contrast to Microsoft who has had its own player in the past (the Zune) but has nothing like Apple in terms of upselling and keeping a customer coming back for more and more as the months and years grind on.

One source that was found for this report centers on something that Nadia La Russa should be careful of. While many larger firms have firm succession plans in place, the same tends to be untrue for smaller to medium-sized businesses and it is also common for family-run enterprises.

Reasons for this include the following: Cost of Business Succession Planning Other work/time demands Overcoming resistance and/or the internal corporate politics of a company Need for performance management A lack or absence of heirs to the company Life-stage incompatibilities (parents are too old or children are too young, etc.) Children are not interested in taking over the business Children have negative feelings or impressions about the business Gender bias against potential female heirs/successors The business is not viable and/or legal/tax issues make passing on the business extremely hard if not impossible to do Another article that focused on small- to medium-sized enterprises like Nadia La Russa included the work of Bruce and Picard (2006) when the specifically centered on those types of businesses in the Canadian business space.

Like the work of Ip and Jacobs, they center on the aging business owners of the world and of Canada. However, they do it in a more general sense rather than focusing on the business owners who happen to be of retirement age yet face vexing issues about succession plans and the tendency of some families to not have an heir-apparent that can take the reins of the business and continue the work involved.

Just as with many other countries like the United States, Canada is facing a glut of business owners that have a decision to make. Whether it be to spin down operations, hand off to a family member or sell off to a third party, one of those three has to be done at some point and the usual choice is to keep things in the family and with continuity from one generation to the next. The statistics in the Canadian business space are daunting.

When asked how many business owners intend to sell off or otherwise leave their current business arrangement within the next five years, the number is a little over four in ten (41%). When extending that time horizon by ten years, the number is over seven in ten (71%). Regardless of the time that will probably lapse from the present to the time the person leaves the business, more than four in five will leave due to retirement being reached.

As noted by this study, what happens to these businesses as they are eliminated or passed onto someone else, whether it is family or a buyer, is important because the resources being consumed will shift to more productive uses and the bandwidth of the people involved will change as well. So as to compare to the survey and other results in this study, about two thirds of the small to medium enterprises (SME's) in the work of Bruce have a formal succession plan.

Of the remaining third, most of them have a plan as well but it is less regimented and formal in nature. About seven percent of the SME's surveyed by the Bruce study had no succession plan of any sort, formal or informal. Also as noted with the prior study, one major hurdle to transferring and changing ownership are the legal and tax-related hurdles involved with changing ownership from one family member to another or from seller to buyer, even if the person is not related.

This are considerations like capital gains, how much revenue the business makes, its debt situation, its tax situation and so forth One thing that is of major benefit to future or selected leaders and businesspeople is a well-rounded business education. While little to anything can replace real-world experience in the field (or, better yet, the actual business) in which a person will be operating or even leading, getting the fundamentals down before getting into the thick of the business climate can save a lot of time.

It is one of many ways whereby current or future leaders can head off having to learn things through personal experience and failure rather than being able to learn lessons through the successes or missteps of others.

Indeed, being exposed to a robust and socially advance school environment can lead to better success when it comes to recruited (or being recruited), planning and socialization as it relates to dealing and doing deals with colleagues, coworkers and customers The research indicates that one of the more dominant business forms that lends itself to family succession and inheritance when it comes to both leadership and ownership are family-run and family-owned farms. A study looked at for this report looked specifically at Canadian farms that were family-owned.

Indeed, most of the farms (in terms of sheer number, but not size) in North America (not just Canada) are family-owned and family-run operations. This tends to transcend generations as one patriarch or even matriarch of a farm will pass the farm on to another person upon their death or retirement from the profession.

While some may suggest that moving a farm from one generation of ownership to the next is much easier than it would be for a traditional corporation in the city, that is far from being the case. The research indicates that transitioning a farm from one generation to another is "not a single act but a multi-staged process that may take many years." Indeed, it is commonly held that the succession process in a farm begins before the prospective or selected heirs even enter the business in the first place.

Further, when one is dealing with a combination of family dynamics and business dynamics, the process and formation of the planning that leads from one generation to the next can be quite complex and difficult to transverse. Just as with other business types, the family factors that lead to potential issues are potential heirs jockeying for favor and money, heirs not seeing eye-to-eye with the people that would potentially be bequeathing them the operations or with each other and so forth.

The business dynamics and paradigms involved would include the intended future and direction of the firm including expansion plans, what will be grown, what will not be grown, who will work for the farm, who will not work for the farm and who precisely will be making all of those decisions. Indeed, a combination of family and business all at once can lead to those decisions being quite difficult.

Most times, the party bequeathing and passing on the farm will be the ones that assert and require their wishes be met but there is only so much that can be required and compelled once the transaction is completed. Making for even more complicated situations and business/family dynamics is when there are multiple businesses, multiple operations and multiple generations involved. Indeed, there can be three (or even four) generations of a family in play in an indirect or direct fashion.

Further, farming takes on multiple business forms including livestock, crops, hay baling and so forth. Livestock itself can be divided into subgroups such as milk production, egg production, meat production (e.g. pork, beef, lamb, chicken, etc.) and so on. Quite often, putting all the power with one person is a bit too much to place on one person and thus displacing and diffusing the power a bit might makes more sense.

An example would be giving control of livestock operations to one brother and crop operations to another A common source of fresh faces and ideas for potential successor managers and owners are immigrants. Using Canada as an example, businesspeople from other parts of the world and North America that would or could include Europe, Asia and the United States can enter the country and start investing and operating within Canadian borders.

There are often strings attached to how soon such immigrants must invest and buy into the business for which they are working and planning. However, it can be a boon for Canada and other countries to allow for such an infusion of talent and investment when there are businesses that do not already have an heir-apparent in the form of an existing manager or family member.

While many workers in these other countries that seek to find brighter opportunities are poor and unskilled and thus lack the resources to invest and buy into companies in Canada, some are just a victim of the circumstances and situations they are exposed to. For example, is commonly known and accepted that Mexico is quite close to being a third-world country due to the massive corruption, graft and other business dysfunction (not to mention much the same thing in the government sector) that exists there.

Thrown in massive poverty, massive unemployment and rampant drug-related crime, there are certainly a lot of stunning minds that would jump at the opportunity to immigrate to another country and put their talents to use in a country whose business environment is more conducive to doing so. One perspective that is gaining a lot of steam is the idea that family-based succession planning should not be forced or coerced when there is not a proper heir-apparent in the wings.

This pertains less to situations where a clear heir does not exist due to no heirs being present or there being no heirs that are of the proper age. For example, if the only potential heir to a firm is twelve years old and a change has to be made now, then something obviously has to be done. Rather, there is a question as to whether succession planning that involves people that are not prepared or properly willing to do what is needed should go through at all.

Indeed, passing along the family business to the wrong person can end up killing the business. The person who inherits the business and its largesse may indeed run the business into the ground or just gut and sell it at the earlier problem or general opportunity. However, it is not remotely that simple in some countries and in some situations. In many countries, passing along a business to a non-family third party is a lot more expensive than passing to a family member, often prohibitively so.

Another complication is when marriages and other family arrangements are coerced and required due to arranged/forced marriages and other such cultural factors. This is obviously not the case in Canada as none of that is remotely present except in the form of immigrants who bring over their traditions and patterns from their root culture and country. Even so, a pattern of family succession is not always the best way to go.

Indeed, there has be a review and summary of any potential successors business acumen and how that figures into their general intelligence and this is true of family and non-family successors alike. Indeed, a nation's wealth and economic performance is determined in large part by the intelligence, performance and planning of the major and minor business leaders that operate within said country. However, it has to be remembered that intelligence is a multi-dimension aspect to a person's makeup and capabilities.

A commonly held saying is that "street smarts" are good but "book smarts" are important as well. Similar or different dimensions that are also commonly factored into intelligence would include emotional intelligence and social intelligence.

Indeed, anyone who leads or runs a firm is going to have to work with and lead other people to some degree or another except in the quite limited case of sole proprietorships (or the other national equivalents) that are one-person operations and that do not require the use of employee-hiring or the looping in of friends or family to help operate and run the business.

Just because two people are related by blood does not mean that they get along nor does it mean that they could or should work together or that one should be a manager or owner over the other. Even so, business success and acumen seems to run in families. Whether that is a function of environment or hereditary precursors probably depends on the situation and there is probably a combination of the two regardless of any given case study or test case.

One rather big asterisk to the above is that marriage, even in Canada and the rest of the West, does not necessarily mean that there is love and affection involved. Quite often, people stay married or become married due to expectations or matters of convenience and wealth When it comes to general succession planning metrics and statistics in Canada, there are some interesting findings that must be discussed to inform the analysis and discussion within this study.

For example, perceptions about the succession planning arrangements that do or do not exist can even vary within a single family that has a family business that is subject to succession planning. Quite often, the owners and current power people of a business may feel that they have succession plans measured and planned out quite well. However, the potential or actual successors often feel the opposite is true.

This is a big deal and must be taken seriously given that, depending on country, two thirds to nine in ten businesses in each country are family-owned and operated. In Canada's neighbor to the south, that being the United States, the amount of businesses and economic situations that are family-driven are numerous but the actual figure is not quite known. It could literally be anywhere from 4.1 to 20.3 million.

Depending on the answer, that would be anywhere from twelve to forty-nine percent of the gross domestic product (GDP) of the entire United States. Similar metrics and projections are seen in Canada. Those figures are probably going to shift greatly in the coming years and decades to the way in which the age demographics of both Canada and the United States are inverting. In the United States, this was referred to as the Baby Boom.

In the late 1940's and 1950's, there was a huge increase in the amount of babies born due to the post-World War II euphoria. Much the same thing happened in Canada during the same overall time frame. However, there was a complete reversal done in the 1960's whereas the birth rate was cut in half (or more) in certain areas.

One or two generations removed from that huge swoon, this means that the amount of older people in the United States and Canada is disproportionately large as compared to those that are younger. This would obviously have implications on succession planning in both a general concept and a family-succession context. The reason for this is that amount of businesses needing to be passed on does not jive with the amount of successors that are in play to receive and operate those businesses.

To be sure, there are other parts of life and government programs that are affected as well but the private sector is largely driven and perpetuated by small businesses that are often family-run and family-owned. Regardless, there will have to be a fairly brash paradigm shift because the patterns that are happening right now are not sustainable Regardless, it is commonly held and accepted that any succession plan needs to follow the same general process. As described by Christensen (1953), there are several steps that should be followed.

Those steps, in order, are the identifying of a pool of potential successors, specification of the necessary criteria, designation of the selected successor and then a communication of the decision about the selected succession to the selected person or persons. Also, there has to be a plan that is attached to when that person starts to take on their new role and when the changeover becomes official.

While it would make sense that many to most family businesses would make sure that all of these plans are in place, there are indeed businesses that do not sufficiently formalize and memorialize these decisions. This leads to a lot of the succession and progressing being left to chance and luck.

Factors that can lead to succession planning becoming a priority would include the health of the ownership or executives, whether there is family harmony or disharmony, potential payoffs that might exist for the firm, the stability of the business and so forth Given the above, there are a few ideas, theories and frameworks that can be advanced.

First, the general success of a succession planning arrangement or situation is very dependent and correlated to whether the existing person or people currently in charge are willing to step aside when it is proper and needed for the firm. Indeed, if a successor has been selected but the incumbent owner or executive hedges about stepping down due to concerns about the person that will be stepping in and filling the shoes of the person leaving, then there will be issues.

As such, there has to be trust and respect involved whereby the incumbent realizes that there needs to be an orderly and planned progression and this means passing off the reins at the right time and without any unneeded or unfounded hesitation. So long as the successor was selected with the proper due diligence and forethought, there should not be a problem as the details involved have already been figured out.

Second, and this is related to the first one, there has to be a competent successor present in the first place. If there is a competent successor present, then the specter of the first potential issue just mentioned is much less than if the pickings for successors is meager and unimpressive. Indeed, there would probably be a positive correlation between the positive post-succession outcomes and the presence of a good successor (or successors) before the hand-off even happens.

A huge x-factor when speaking about both of the above are the perceptions and feelings of the potential successors. While it is certainly optimal that everyone put in an honest effort, not undermine each other and fixate only on what is good for the business, there are so many situations where this is simply not the case.

Whether it be dysfunction or issues between siblings/cousins, acrimony related to a marriage gone south and so on, there can indeed be some real issues when it comes to who all will be involved in a succession plan and who perhaps should be excluded or have their power reduced There are real consequences to not having a succession plan in place and this goes double for a business that is a family operation.

Indeed, situations where the path of succession is not clearly defined often comes down to the preponderance of those that remain when there are disparate owners and stockholders or probate-induced inheritance in the case of a majority owner who passes without a clear line of succession. For example, if a person owns 75% of a firm and then dies, that person's wife or husband will typically inherit the power to do what they will with the business stake their spouse controlled.

Sometimes this works out for the best and sometimes it can be a proverbial train wreck. Further, even if there are massive amount of money and resources that are at the ready for a successor, they can become "dead money" if they are not leveraged and used properly.

For example, money that is collecting modest interest in the bank is all well and good but it is not going to do a lot of benefit to a firm if it is not being leveraged and used in terms of investments, expansion and keeping a business and its operations in tip-top shape. Quite often, money gets tied up in trusts and other pre-defined monetary arrangements.

Both before the money ends up being disbursed and after the fact as well, there are a lot of situations where large sums of money that come from proper business operations that went well become wasted and inefficiently spent and allocated. For example, if someone inherits a million dollars from a deceased parent and that money ends up being frittered away on parties and booze, then that would be an extreme case of a large amount of money going to waste and not being used efficiently.

Of course, most examples are not that extreme. Quite often, inheriting spouses or children try to take the reins and continue the pattern of success realized by the person and/or court that bequeathed them the money. However, there are many situations where the person or people that receive the money cannot work properly in concert to keep the business going and/or the money ends up being misspent and wasted on improper business endeavors and personal gains.

It is no accident that lottery winners often end up with their lives in ruin when they money is gone and they have nothing to show for it. Athletes who make it big in their 20's and then flame out in the 30's are another example.

It takes a combination of good money getting to the right people and those right people using the money in a way that keeps the business thriving and surviving However, it has to be noted that not all loss of financial power is due to neglect and lack of knowledge. Quite often, the ability to transfer and wield the inherited money or business frameworks is inhibited by legal, cultural and regulatory frameworks.

There is also the fact that estates of any major size or shape are taxed upon the death of its owner. For example, someone that dies with a million dollars could end up only bequeathing three fourths of that (or less) to the next generation. These laws and frameworks vary quite a bit based on the nation in question.

However, nations like Canada, the United States, Australia, Germany and France all have some rough similarities in terms of the patterns they follow and what the government feels its entitled to from money that has already been taxed once (if not many) times before 13. Some organization have higher stakes than others when it comes to succession planning.

Indeed, healthcare and government agencies are agencies that truly need to have a good system in place as there cannot be a lag period between the time that one person leaves power (for any reason) and another person comes in to fill the void. Just like the private sector and as mentioned before, a good pool of potential successor candidates needs to be identified. Those candidates need to be associated and paired with the potential and likely positions that they could or should fill.

It then needs to be communicated to the selected candidates that they are in line for a shift to power. They should be told what is expected from them, what is needed from them and what is required to keep the pathway to leadership or ownership intact. Selecting a leader and allowing the "sink or swim" methodology to take hold should never, ever happen. There will obviously be a period of adjustment and learning even after a changeover takes place.

However, the time it takes to absorb that change should be minimalized to whatever extent possible. Further, the existing leaders are going to be the best people to look to as it relates to selecting the next generations of leaders. They are already in the role, they know what they have had to do to survive and thrive in the role that is to be filled and thus they are the best people to weed out the best candidates and discard the people that are truly not up to snuff.

Regardless of who seems like the best candidate, it has to be verified whether the person is truly qualified and whether they are even interested in taking on the role. If they are and they have what it takes, the process needs to start from there Last up is a focus on one major part of the private sector infrastructure, at least in terms of where good leaders come from, are the colleges that pump out business and similar graduates.

Indeed, it was noted before that the population of Canada and many other countries is aging quite quickly due to the boom and bust of the birth rate in Canada, the United States and other countries between the late 1940's and the 1980's. While it is easy to see all of that in terms of general demographic, it is also easy to see when looking at the colleges of Canada.

Indeed, nearly three fourths of all college personnel in Canada as of 2013 were "baby boomers" and this means that they are all approaching retirement age, assuming they are not already there. Just to paint a real-world picture, the Ontario system of college has about nine thousand employees. Most of them are academic but about two thousand are administrative employees. If seventy percent of those people are at or near eligibility for retirement, that would mean more than six thousand (6300) of them will potentially be leaving soon.

Obviously, some of them will stay somewhat if not well into retirement. Often times, there are those that literally teach and/or serve until they die. However, quite a bit of those people will indeed retire and they will need to be replaced in some fashion or form or there will have to be a regression in terms of the academic and administrative services that will be offered.

Given these statistics, it is clear that succession planning is needed at colleges as well so as to ensure that the educational system does not falter and fall into disrepair. It is much the same argument made prior as it relates to the healthcare system and the public sector at large. As least with the college situation just mentioned, there does seem to be some cognizance of the issues and implications.

Indeed, when people were asked how important they felt succession planning was, seven in ten said that was "very important." Only five percent felt it was "not important." One thing that these colleges have tried to engage in that has not already been mentioned is mentorship. Indeed, pairing someone who is a little green and inexperienced with someone who knows what is going on, has what it takes to succeed and otherwise already has the tools is going to be invaluable experience to someone who is just starting out.

It can also be a great indicator and example for someone who is perhaps not sure whether they wish to be a successor and/or what type of position that they want to be a successor for.

If these sort of questions can be answered in advance, it saves a lot of time, resources and aggravation Chapter V - Succession Plan for Nadia La Russa As has been heavily noted and scrutinized in this report, Nadia La Russa is a multi-faceted business whose different facets rely on each other and these facets are not self-sufficient. As such, any successor owner or manager must know and understand the following: That none of the individual businesses in the Nadia La Russa envelope is up for sale.

It would gut the ability of the remaining business units to be productive or ever be self-sufficient. As such, any manager or owner that would try to sell off rather than expand the Nadia La Russa business empire should not be allowed to take over the company On a similar token, any successor should probably not create any other business units at this time as six business units that are not individually self-sufficient is probably too much as it is. Any successor should perfect and improve what is already there.

Perhaps down the road half or most of the businesses will do great on their own and there will be one or two stragglers. If and when that happens, perhaps a change in approach is warranted. However, Nadia La Russa is nowhere near that point yet. Any successor managers at one of the subsidiaries need to own and know that subsidiary extremely well and they need to know and understand the inter-reliance that the different business units have.

Any successor manager or owner at the corporate parent level needs to have even a higher level of knowledge. While a subsidiary manager can get by with a basic understanding about the importance of having one business feed the other and knowing their on unit very well, the corporate parent management needs to have the full picture and they are the ones that will perfect the business models for Nadia La Russa as a whole.

They are the ones that will create and enforce the visions like the ones Apple had with iTunes and so forth as a means to make Nadia La Russa a revenue giant and put them in a position to have businesses that are self-viable and self-productive. Any successor manager, whether it is a subsidiary head or a corporate leader, needs to understand that no one unit is better than the other and they all serve their own purpose.

There should be no collectivism or lack of networking as the flow of information between each unit and the corporate leadership should be free-flowing and predicated on helping the entire Nadia La Russa corporate envelope rather than people protecting their territory and not doing what is best for business and the customer. Nadia La Russa should themselves outsource as needed, at least for their internal mechanisms, when it makes business sense. Specialization in too many things can be a hard thing to pull off.

If Nadia La Russa can do so in one or more facets of their business without sacrificing service quality, then they should do so. They should also have contingencies for vendors and such but keeping service contracts and such as streamlined and simple as possible while not sacrificing performance is the optimal way to go.

For example, if the Towncar division has a two or three mechanics they go with for their cars, then those two to three can compete with each other to offer the best service at the lowest rates. However, Nadia La Russa should keep one or two of those losing parties in mind in case things go south with the selected one. Better yet, using the two best ones allows for only one more than the minimum while allowing a backup in case the usual mainstay is not available.

Business clients are usually treated with much more deference than regular consumers. The more business or more potential business, the better. The backup may use that as a chance to up their game and become the primary service entity for the task at hand. Regardless, the managers (as well as any successors) at Nadia La Russa need to take these tactics to heart and make sure that anything that can be reasonably done in house for little expense should probably be done in house.

However, for tasks that can be done outside the firm for less cost with minimal hassle is also something that Nadia La Russa management, ownership and any successors for both should keep in mind. Any manager or successor manager that engages in the practice of cutting a business to the bone in terms of operate expenses and such should not be involved in the succession plan for Nadia La Russa.

There is absolutely nothing wrong with keeping things "lean and mean." However, if a person were to sell all of the Towncar divisions cars in favor or econo-box cars to save money, the customer would reject that without a second thought. Of course, the fleet of cars must be operated efficiently and methodically. However, there is an expectation that the cars will be better (if not much better) than a common taxi in terms of the products used for the service as well as the service quality itself.

Hiring friends (cronyism) or family (nepotism) due to simple bias and preference is less than wise and should not occur. The best person for the position should be hired as Nadia La Russa is not a family-only operation and thus it should not be operated as such. Further, the people selected, groomed and brought up through the ranks should be the best of what is available rather than what is pressured or coerced via friendship or family relation.

Chapter VI - Discussion & Analysis There are always multiple ways to run a business. This is something that is not in dispute. However, there are indeed the common, best and expected ways of doing things. For example, doing something just to save money that clearly would (or should) rub the customer the wrong way is something that no business should so. Similarly, cutting a business to bare bones just to maximize profit or line one's pockets in an acquisition is also viewed dimly by many people.

However, there are firms that make a mint off of doing so and it happens every day. During the last Presidential election cycle in the United States, candidate (and eventual loser) Mitt Romney was pilloried for doing that while at Bain Capital. One thing that firms like Nadia La Russa and others have in their favor is that they can select and groom whomever they wish.

While family is probably the preferred source of their successor person or persons, there are plenty of other people that can at least assist in keeping the trajectory of the business the same as it is now, subject to things like economic and similar events that require a reassessment of one's business model or overall strategy. Further, not all family members are necessarily interested in being the next generation of a business and others still simply do not have the capability of doing so in the first place.

While it would be elitist and prudish to suggest that one has to have impeccable educational or work credentials before taking over, a family member has to start from the ground up and learn all of the aspects if there is to be even a realistic chance, not unlike what an external hire would have to do.

Family members who could be or definitely will be heirs to a business would be wise to learn the lessons the current owners can give because it saves a lot of the work and rigor of learning lessons the hard way like their older family members often had to do. Indeed, it is far easier to learn lessons and from the mistakes of others, family or not, than it is to learn it firsthand and perhaps regress (or even see the business fail).

Since no one unit of the Nadia La Russa envelope is self-sufficient, it is extremely important that the successor know the landscape well before it is their business to help grow or to see fail due to lack of knowledge and/or foresight.

Chapter VII - Recommendations & Best Practices There are a couple of recommendations that the author of this study would offer after reviewing both primary and secondary research avenues: It is probably best that family businesses stay in the family but this is not an absolutely rule due to a litany of factors Do not hand off a business to family members unless they are committed to the business and its ongoing operation. It should be apparent if this is the case or not.

Do not pass to family members that are engaging in-fighting or jealous behavior without very careful forethought. Be EXTREMELY explicit who is in charge and who is not when passing the business to a new generation. If Child A is very sharp and Child B. is not so much and you want Child A to be the point person, that should be extremely clear in terms of what title, control and resources Child A is given as compared to Child B.

Whether keeping things in the family or going elsewhere, make sure that the tax and legal implications are known before executing any transactions or passing along control of the business. For example, if a husband owns the business, that would generally mean that the husband's spouse has equal (or at least some) rights.

Iron out those details before any sale is execute and make sure the proper consents are collected Do not pass along a business to an owner or manager that will treat the business as a piggy bank or a passing interest. Either they need to be engaged in the day-to-day operations at a high and intimate level or they need to delegate to someone who will do so.

The latter is going to cost more money, of course, since the hired person and the owner will both want to get paid from the business. Do not ever leave a plan in informal or unwritten format. This goes double if the business is going to family. Write down and sign off on everything but only after all of the aforementioned legal and tax-related pitfalls are reviewed and considered.

Any contract or succession plan should be extremely specific, should be extremely well-written and the intentions of the seller of the business should match precisely with what the documents say. Make sure that desired retirement plans and succession plan time lines coincide at least roughly. If a person wants to retire in five years and there is no heir-apparent, it has to be understood that a decision has to be made. Either a successor has to be found or the business will have to be wound down.

What should never happen is that a successor is found in an incomplete and rushed fashion thus leading to the passing of a business to a person that is ill-prepared or has ill intentions. Understand that there is a limitation on what a successor manager can be prevented from doing. Once the sale or passing of the business goes through, there is not a ton that would stop the person from doing things that the passer of the business may not have liked.

This is where judgment, review of a person's commitment and the characters of the successor is a huge factor that must be taken completely seriously. Make sure that the successor manager is a good people person and that they have a good rapport with the rank and file employees. If this is not the case, that must be figured out. It could be misperception but it could also be for good reason. Employers and their managers are sometimes out of touch and heartless.

However, employees can be selfish and just punching a clock. Both are conditions that must be fettered out and corrected as needed if and when they arise. Chapter VIII - Conclusion In the end, it is clear that Nadia La Russa is heading in the right direction. It could be concerning to some that there are no self-sufficient businesses in the Nadia La Russa envelope.