One of the ongoing topics for manufacturers’ representatives is “why do” and “how to do” succession planning. Indeed the feature article in the August 2014 “Agency Sales” magazine, published by MANA, is “Key to Succession Planning: Start Early”. The article promotes the benefits of starting a discussion early in the life of a rep agency about the future of the agency.
The answer to the “why do” a succession plan is to continue the life of the agency beyond the founder’s or current owner’s work life. The answer to the “how to do” a succession plan is not so simple or easy. To start there has to be a mutually agreed upon valuation of the agency. Then the parties involved have to work out all the details of the purchase and the transition.
The value of the rep firm is based on a number of factors, not limited to but including the lines the agency represents as well as the current owner’s knowledge, relationships, and reputation for the way he/she does business in the territory and industry. No matter the reason for the owner’s departure from the agency, the next owner has to demonstrate to their Principals and customers that he/she is capable of maintaining the level of professionalism, relationships, knowledge, and customer service previously established.
Now more than ever, with the large number of Baby Boomers beginning to retire or looking at retiring, a solid plan must be in place to realize the full value of the agency and assure business partners of a seamless transition and continuation of the same level of commitment and professionalism to which they have become accustomed.
The answer to the “why do” a succession plan is to continue the life of the agency beyond the founder’s or current owner’s work life. The answer to the “how to do” a succession plan is not so simple or easy. To start there has to be a mutually agreed upon valuation of the agency. Then the parties involved have to work out all the details of the purchase and the transition.
The value of the rep firm is based on a number of factors, not limited to but including the lines the agency represents as well as the current owner’s knowledge, relationships, and reputation for the way he/she does business in the territory and industry. No matter the reason for the owner’s departure from the agency, the next owner has to demonstrate to their Principals and customers that he/she is capable of maintaining the level of professionalism, relationships, knowledge, and customer service previously established.
Now more than ever, with the large number of Baby Boomers beginning to retire or looking at retiring, a solid plan must be in place to realize the full value of the agency and assure business partners of a seamless transition and continuation of the same level of commitment and professionalism to which they have become accustomed.
The current owner’s relationships, market and industry knowledge are an invaluable part of the value of the company and is a part of what makes Principals, customers, and other business associates nervous – how will they work with another person. The retired agency owner spent years building relationships, learning about the individuals and the industry he/she worked in. If that information has not been captured and stored somewhere easily accessible to the new owner, who has to start building a new relationship with those same Principals and customers, a valuable asset has been lost.
So, how can you minimize the loss of those relationships and all of that knowledge? The best way to overcome the qualms of customers and Principals is to have a well-used CRM system in place. Having details of the interactions and knowledge about Principals, customers, and other business associates in a central, shared system that can be passed on to the next owner is priceless.
The new owner will find a wealth of information in the activities, sales history, and reports found in the CRM system. Analyzing which lines and customers are profitable, where sales and marketing efforts should be focused, and which employees fit into the new owner’s plans is so much easier with a good CRM system in place.
And as the new owner, if there is no CRM system in place, don’t delay – implement a CRM system right away, so you have one more valuable asset already established in your succession planning!
So, how can you minimize the loss of those relationships and all of that knowledge? The best way to overcome the qualms of customers and Principals is to have a well-used CRM system in place. Having details of the interactions and knowledge about Principals, customers, and other business associates in a central, shared system that can be passed on to the next owner is priceless.
The new owner will find a wealth of information in the activities, sales history, and reports found in the CRM system. Analyzing which lines and customers are profitable, where sales and marketing efforts should be focused, and which employees fit into the new owner’s plans is so much easier with a good CRM system in place.
And as the new owner, if there is no CRM system in place, don’t delay – implement a CRM system right away, so you have one more valuable asset already established in your succession planning!
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