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Monday, July 17, 2017

Tips for Successful Succession Planning from Tommy Boy

If you have ever seen the cult classic Tommy Boy you should know that having a succession plan in place does not guarantee that your succession plan will be successfully implemented.

If you have never seen it, you should since it’s hilarious. It tells the story of Thomas R. “Tommy” Callahan III’s attempt to save his family’s business, an auto parts factory, from being foreclosed on by the bank or sold off after his father, “Big Tom,” suddenly dies of a heart attack after marrying a con artist.

“Big Tom” had obviously worked with a succession planning attorney because there are different classes of shares, and various contingencies in place, but when he dies unexpectedly, things are a mess. It’s a comedy, not a tragedy, so things work out okay in the end, but the movie highlights the importance of putting a succession plan into action, not just into place.

Don’t Assume Your Family Can Take Over

In the movie, Tommy takes a job at the family business after barely graduating from college after seven years. Big Tom assumes that his son will take over the family business when the time comes, but Big Tom and Tommy are not really preparing for when that day will come. Tommy does not take his job seriously, and Big Tom just looks the other way.

Business owners planning on passing their business on to the next generation need to be sure that the family members they hope will take over are interested in doing so, and have the skills necessary to do so.

Your Reputation May Be Your Biggest Asset

In the movie, the bank threatens to foreclose because it was relying on Big Tom to lead the company’s expansion into brake pads. A potential buyer plans on using the brand name and Big Tom’s reputation to expand its own business, but will shut down the plant built by Big Tom and fire all his workers. Obviously, Big Tom’s reputation is one of the company’s most valuable assets.

Business owners need to consider whether their business can succeed without them at the helm. If not, it is going to take a lot of hard work in order to get the business in a shape where it can be passed on or sold as a going concern instead of shut down.

Employees Play A Much Larger Role Than Many Employers Anticipate

Tommy is lucky that the company’s employees are loyal and competent. Big Tom obviously invested in his employees, but he did not really include them in his succession planning. This is a mistake in the movie, since the employees help Tommy save the company, but it is also a mistake in real life.

Employees are often a company’s biggest asset. They must be on board with any succession plan if that plan has any hope of success.

Putting A Plan In Action Is Better Than Putting A Plan In Place

The big lesson from the movie is that even the best made plans are just plans. For a succession plan to be a success, it must be implemented and acted upon well before most owners think it is necessary to do so. Successors need to be trained, not just identified. The company’s assets need to be secured by more than the owner’s reputation. And everyone from the current boss, to the successor, to the employees needs to be aware of, and on board with, the plan.


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