Does Your Shop Have a Succession Plan?

How does a family-owned manufacturing company successfully transition ownership from the first generation to the second when there’s no succession plan in place?

I faced that question 11 years ago when my father passed away and left the fate of our family’s business hanging in the balance.

I was 30 years old with a six-month-old baby at home. While I’d worked in the shop for years, I wasn’t necessarily prepared to step into a life-changing leadership role.

And yet, with plenty of support and determination, that’s exactly what I did.

4 Challenges I Had to Overcome

Today, I’m the sole owner of Area Tool & Manufacturing, Inc., and our business is thriving. But our success story isn’t one without struggles. I had to overcome four significant challenges as I assumed a leadership role:

1. Lack of succession plan

Not having a succession plan added stress to an already difficult time for our family, and it cost us some valuable employees.

Key team members departed due to concerns about the future of the business—they didn’t know if the shop would be sold to a larger corporation or how we would proceed.

We completely understood their position, but had we provided a pathway and been able to assure our team that their future was secure with our company, those essential team members might have stayed with us.

2. “Green” leadership

After our key team members left, I assumed more responsibilities, learning on the job. I tried to ensure customers and employees were happy, but I made some rookie mistakes. I didn’t know how to navigate the changes we wanted to lead our team through, for starters.

Complicating matters further was that no one had officially put me in charge—I had simply stepped up to keep our business running. Many employees knew me from when I was a kid running around the shop floor, and some struggled to see me as a capable leader.

3. Ambivalent customers

Many of our customers had worked with my dad for 35 years. They saw me as his daughter or his secretary, not a leader within the business.

Some buyers misjudged my ability to step into my new role because I was a young woman. I had to put faith in myself quickly and prove my ability by standing on my own two feet.

4. Hiring hurdles

I desperately needed to fill the newly vacant positions in our shop, which meant I had to interview people more experienced and qualified than I was. What’s more, I had to convince them that working with me, and with Area Tool & Manufacturing, Inc., was the right next step in their career.

I needed to be mindful of my hiring approach—acknowledging my own lack of machining experience while attempting to instill confidence in my leadership abilities.

Lessons Learned from Transitioning Ownership without a Succession Plan

With the transition now a decade behind me, I can clearly see the hurdles I’ve overcome. I can also recognize the many lessons learned in the process. Here are my biggest takeaways:

Put pride aside and prioritize your people

It was easy for me to put my pride aside and ask for help, but I know that’s a common struggle among leaders. I realized early on that if I didn’t place faith and trust in my employees, the transition wouldn’t work. I couldn’t run the business by myself; I needed my team’s expertise, skills, and talents.

To transition from one generation to the next, us younger folks must be willing to learn from those who came before us. I have so much respect for the business my father built and the people he hired—many of whom worked for him for 20+ years. My biggest goal is for everyone who works at Area Tool & Manufacturing, Inc. to retire from our shop, not leave it for another job.

I solicited feedback from team members and resolved to create a united driving force instead of being the lone driver of the business. This strategy has been hugely successful for our team and our business’s bottom line.

Lean on community

To be successful, I knew I had to lean on peers in the industry who knew more about running a manufacturing company than I did, so I contacted the National Tooling and Machining Association (NTMA) right away. I was able to ask questions and get resources to help me navigate challenges specific to precision machine shop leaders.

Reaching out to a peer group was the best thing I ever did. Even though our businesses are competitors, my peers at NTMA make up a supportive community that I have turned to time and again over the last decade.

Hire the right people

I relied on the solid foundation and reputation my father had built to fill a few labor gaps with the right people. Through perseverance (and, if I’m being honest, prayer), we met people willing to take a risk on us because they saw the opportunity.

Since we were a small shop and I was pretty green as a leader, I was looking to hire senior staff who could climb the ladder faster than I could. The prospect of moving up quickly in our organization was attractive to new hires, and it helped us build a strong leadership team to support me.

Make it work

Today, over a decade later, I can see how my father’s passing was pivotal for our business: in that moment, our shop was either going to shut down or continue for years to come. At 30 years old, having just lost my dad, I wasn’t ready to lose the shop, too. Instead, I had to commit to making it work. Sometimes, to succeed, willpower and passion are even more critical than skills and experience.

 

Advice for the First and Second Generations

I’m so proud of how far Area Tool & Manufacturing, Inc. has come. Still, there’s one thing I would have done differently in retrospect: initiated a conversation with my father about a succession plan while there was still a chance.

None of us want to talk about our mortality, but these discussions are also about giving someone the opportunity to choose their legacy—and I advise all shop owners and their families to put in this hard but meaningful work.

First-generation shop owners lay the brick and mortar. They’re rightfully attached to their businesses and invested in the future. The next generation could learn from asking them, “How do we set up this business to last another 40, 50, 60 years?”

Conversations like these not only help inform succession plans but also transfer priceless tribal knowledge from one generation to the next. My dad could have taught me so much, and we could have partnered on a smooth transition for our team and customers.

For a transition to truly succeed, subsequent generations need to be gracious and grateful for all the blood, sweat, and tears their elders poured into the business and respect the paths taken up to this point. Together, family shops can be thoughtful and successful about the kind of legacy they want to create.

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Ashleigh Wehrle is the sole owner of Area Tool & Manufacturing, Inc., an ISO 9001:2015 certified contract manufacturing company offering precision machining, wire EDM, sinker EDM, and surface grinding services in Meadville, Pennsylvania. The employees and management of Area Tool & Manufacturing, Inc. have become a close-knit team working toward a common goal of producing top-quality tools and assuring each customer that their jobs will be manufactured here, in the United States of America, with pride and integrity.