Background

1. Small Business Succession Planning in Southern Minnesota Alexander Mozey, Tatiana Soboleva, Nicholas Laxen, Regan Knapp Minnesota State University, Mankato alexander.mozey@mnsu.edu, tatiana.soboleva@mnsu.edu, nicholas.laxen@mnsu.edu, regan.knapp@mnsu.edu Faculty Mentor: Dr. Emily Stark, Dept. of Psychology, emily.stark@mnsu.edu Background • Method • Participants • Twenty owners of small businesses in Southern Minnesota that attended the business succession event. • Fourteen of them are family-owned companies. • Methods and Procedure • We developed an online questionnaire using Survey Monkey. The questionnaire was sent to individuals who attended the succession planning event in March, 2011. • Example Survey Questions • We questioned the participants asking such questions as: • To what extent has your company engaged in succession planning? • In general, how much is succession planning an important issue for your company? • Do you feel confident in succession planning within your business/ company? • What successes or challenges have you encountered in succession planning within your business/ company? Discussion • Small businesses in Southern Minnesota are in the process of succession planning. This subject is important for the owners but at the same time it is one of the least defined and most misunderstood aspects. • Third party help is needed by the businesses in order to develop succession plans. • Family unity is an issue in small businesses. • Overall, our findings from the survey indicate that businesses find succession planning a valuable tool in the long-term success of their company. Many small businesses have a succession plan or the resources to start creating one, so a training provided for those businesses would be worthwhile. We conclude that the event was useful to small businesses in Southern Minnesota. SMIF should organize another similar event with respect to the obtained suggestions. • Limitations • Our research had several limitations: • Small number of surveyed attendees. • Use of electronic survey. • Subjectivity of rating for some of the questions. • There is no guarantee that the respondents are fully aware of the meaning of business succession. • Recommendations • For future events: • Before the event, provide a pre-event questionnaire for topic interest. • Identify the companies’ future needs in Southern Minnesota, and emphasize that aspect in the event topics. • Analyze coping with issues of multiple partner business (particularly for closely related families) during the event. • Invite 3rd parties who are experts in succession planning (so they can network with businesses). • Organize workshops or leadership series effectively communicating about the event. • Business succession planning is an essential part of any business. • Reasons for succession planning: (Clifford, 2008) • Tax incentives • Economic security issues • Functioning of family relationships • Survival of the business beyond one single owner • Starting the Process: (Anderson, 2010) • Current managers overlap with prospective managers • Offer incentives for succession planning (goal of SMIF grants) • Assessing skills of possible successors to make sure they are a good fit (Kent State, 2008) • Businesses in Southern Minnesota: (Greater Mankato Growth, 2010) • 56% of the total Greater Mankato economy represents businesses with 1 to 4 employees • 98% of businesses are under 100 employees and most of them are family-owned businesses. • Current Study • One of the main goals of the Southern Minnesota Initiative Foundation (SMIF) is to promote entrepreneurs and business and provide support and funding to help them grow and flourish within their local communities. • In 2011, SMIF organized business training sessions on succession planning for Southern Minnesota small businesses. Our team aimed to analyze the effectiveness of the session. • Main Goals: • Determine how important business succession planning is to the company • Assess the impact of the SMIF sessions • Provide recommendations to SMIF for future events • Results • How important was business succession planning to the companies? • On average, the attendees estimated the importance of the business succession planning as being 3.95 on a 1-5 scale • Business succession planning is a very important aspect of business development for the Southern Minnesota companies. • Did businesses feel confident in succession planning? • Five out of twenty attendees responded that they are not confident in succession planning for their company, and six were moderately confident • The source of uncertainty came from: • Family unity issues emphasizing the ways “to determine value of family members that are willing to continue with business.” • Finding one person who could get the information needed; compiling it in one document. • What other resources or information would be useful for businesses to help engage in succession planning? • Networking with 3rd party advising in succession planning • Information on efficient time management and generational transition that will not negatively affect business activity • If another succession planning event was developed, which topics would be most useful to include? • Family communication enhancement • 3rd party advising Acknowledgements We would like to thank the Southern Minnesota Initiative Foundation and the Honors Program at Minnesota State University, Mankato for giving us the opportunity to get involved in this research. References Anderson, M.J. (2010). Succession as a Component of Strategy. Of Counsel, 29(5), 13-17. Baylor University. (2009). Passing he torch: Family Business Succession Planning. Retrieved March 17, 2013 from http://www.baylor.edu/business/research/index.php?id=686729 Clifford, Steven. (2008). An Owner’s Guide to Business Succession. Kent State University. Retrieved March 17, 2013, from http://dept.kent.edu/oeoc/spp/ownersguide.pdf Greater Mankato Growth. (2012). Forbes ranks Greater Mankato 11th of “Best small places for Business and Careers.” retrieved March 18, 2013, from http://www.greatermankato.com/forbes-ranks-greater- manakto-11th-best- small-places-business-and-careers Greater Mankato Growth. (2010). Labor Force Data. Retrieved March 18, 2013, from http://www.greatermanakto.com/labor-force-data#BusinessEstablishment Hubler, Tom. (2012). Inside-out Succession Planning. Retrieved March 17, 2013, from http://hublerfamilybusiness.com/OwnershipPlanning/InsideoutSuccessionPlanningPart1.aspx Taken from: www.hallerfinancial.com