Succession Planning for Lighting Showrooms
April 5, 2012 - 2:48pm
Lighting showroom owners share their tips for how to pass the torch on to the next generation.

For four years, Annapolis Lighting Co. President Preston Clark and his wife, Carlotta, have been deliberating the knotty process of turning over their four-store lighting showroom business in Annapolis, MD, to their daughters, Margaret and Miriam.    

“To just walk out and leave the business on them would not be helpful,” Clark says. “It’s complicated. There are no standards to follow and all kinds of emotions involved.”

Welcome to succession planning, for which small business owners must train new leaders, tally the assets, map out a transfer, provide for their own retirement and somehow clarify—and unify—the roles of all members of the family. Where does one begin?

The first step is to ready current operations for a change at the helm. M&M Lighting President Allan L. Margolin says the transfer of his family’s business succeeded because the company was stable at that time and has been since—supported by its customers, operations in Houston and Dallas and employees willing to stand by the new leaders.

Margolin, 52, began assembling chandeliers when he was 8 and had worked full-time in the business for more than two decades when he took charge. “It was an easy decision for my dad to hand over the business to me,” says Margolin, who now runs the company with one of his two sisters.

The transfer of Tucson, AZ’s Sun Lighting Inc. was a bit more difficult. Danny Levkowitz says his family’s succession plans became complicated after his father took ill. Fortunately, all of his siblings agreed on how to best handle the process.

“I put in the time and the effort,” says Levkowitz, who worked in the family business for 20 years. “There were plenty of chances for my siblings to come in and work, but they never did.”

Levkowitz bought the business with his wife in 1992, and they are thankful they have sole control. 

“You can’t have vocal partners. It’s what has destroyed a lot of good companies,” Levkowitz says.

But a successful transfer must also provide the wherewithal to support not just one, but two generations: the new owners and the seniors looking to retire. Parents turning over a business need income to live out their lives—no problem if the children pay a buyout price. Otherwise, the business will need growth to support not only the parents, but also the salaries of the junior generation and ongoing capital requirements.

“It’s a constantly evolving process,” says Dave de Steiger, President of Ray Lighting Centers, a three-location lighting showroom and electrical distributorship based in Sterling Heights, MI. “Most people who have gone through this have brought experts on board.

"You have to know what everyone’s role will be and how everyone will be taken care of after the transition,” de Steiger adds. He is currently working through a family business transfer with two sisters and a brother.

Of course, this varies by family. But as Levkowitz sees it, ownership should be limited to those involved day to day. That applied in his case and, he says, will apply to his two sons, ages 24 and 22, who are being groomed for possible succession.

“Children should be forced to work in the business,” Levkowitz says. “Our business revolves around getting customers, staying competitive, knowing how to hire and when to fire. You can’t grow up uninvolved and then, one day, sit in dad’s office and expect it to work out."

“The key is to treat everyone, including your children, in a professional way and at arm’s length. It sounds horrible and cold,” Levkowitz says, “but that’s what you have to do.”

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