Personal and professional challenge of sudden succession planning
BRITISH visitor numbers are down, obviously due to the fall in sterling. But numbers from other countries — especially from the US — are up and compensating. Regardless of where they are coming from, tourists will always need transport. So whether it’s planes, trains, automobiles (self-drive), bicycles or buses, transport operators have a key role to play.
One of the biggest operators in Dublin is Eirebus, with a fleet of 65 quality coaches. Eirebus is a family-owned business, co-founded in 1971 by the Kavanagh family.
It’s an off-shoot of the original Urlingford-based Bernard Kavanagh & Sons, in operation since 1945. Until recently, Paddy Kavanagh was Eirebus managing director. Eirebus is at the coal-face of tourism in Ireland. They also provide coach hire for specialist groups such as golfers, wedding parties, and so on.
Paddy was keen to ease the dependence on the summer tourism trade. He acquired the Swords Express service in 2011 and oversaw its expansion in the years that followed. This is a scheduled service that operates for 52 weeks of the year and has been added to recently with the Fingal Express.
The capital cost of idle coaches in winter time is intensive and operators need to sweat those assets. Total dependence on tourism can be a risk, due to currency fluctuations, etc. It can only be a good thing to de-risk your business where you can. Recent challenges Paddy’s daughter Sinead joined the business in 2003 and over the years she learned the ropes from the ground up. She has played a key role in defining and developing the company’s overall strategy. She since became shareholder and marketing director in 2009. Soon after, Sinead’s husband Jeff Clarke also joined the family business and quickly rose to the challenge of transport manager for the business, later assuming the role of operations director.
Planning for succession is a priority for all family businesses. There are two aspects. One is the ownership issue which involves legal and taxation matters. The other, often overlooked, issue, is the management, ie who will do what, when and how… and how should the legacy be carried on. This typically raises questions around best fit, competence, skills, founders’ wishes and countless other important matters. Good sense should always ensure that best fit dominates over any sense of entitlement or birthright.
The intention was for Sinead to take over the running of the business in an orderly fashion over time. But, sadly, Paddy passed away suddenly in September. Unfortunately, that didn’t allow time for the planned handover. Sinead is not only having to deal with the personal loss of her father, but she is also faced with the immediate task of taking over a very successful business.
Change tips The immediate priorities are to ensure that the business continues to trade effectively, until such time as the initial grieving has eased. Most companies will have a great team to step up to the mark, as with Eirebus. For the past 12 weeks, it has been business as usual. As the business continues to operate under the guidance of Sinead and Jeff, there are some major things to be done. The following is not necessarily a sequential list as every company is different.
Finances Quickly get a handle on money matters. You don’t have to be an accountant to understand where it’s coming from and going. Seek advice from your accountant or banker. Make sure you know and understand the key drivers — which you will extract from profit and loss accounts, cash-flow statements and balance sheet.
Team Take time with your team, from management to the front line. Start with general meetings to reassure everyone of your intentions. Follow up with one-to-one meetings to know each person better and listen to concerns. Establish who does what and when. Don’t rush to make changes: it’s probably with the status quo for the time being.
Customers Some 80pc of your sales will most likely come from approximately 20pc of your customers.
Make contact with the most important ones (whether that is by size or level of influence) to reassure them and listen to their concerns. Move quickly to illustrate that you are in control. Be seen to make your mark by taking corrective actions on any problem areas.
Products and services As with customers, use the 80:20 rule to better understand your most and least profitable products and services. Take time to understand why they are so and what tactics had been employed in the past. There may be good reasons for the mix as it is, so don’t make snap decisions.
After 100 days… All of this will take time, especially as you go through your own personal journey. Consider bringing in an external mentor, even initially, to guide you through a facilitated and structured planning process with you and the top team. This will give you an opportunity to take time out in an objective way to craft a strategy and an action plan for the short and medium term.
Summary Working with family companies of all sizes, I know that succession is challenging, whether it is carefully planned or imposed through life events. This particular situation is exceptional due to the suddenness of it. The steps might well be different in other situations. Nevertheless, new leaders inevitably bring change and new ideas. With empathy, planning and good communications, everyone in time will accept that.