Two composites fabricators share their succession planning success stories.
A survey on business owner succession planning conducted by the Financial Planning Association/CNBC in 2015 found that 78 percent of respondents planned to sell their businesses to fund their retirement. However, less than 30 percent of those respondents actually had a written succession plan. But succession planning – selecting an individual qualified to replace you in your business – is a complex undertaking that can take years of preparation.
“Creating a serious succession structure can take three to 10 years depending on the maturity of the leadership,” says Kevin Kennedy, CEO of Beacon Exit Planning, a specialist in helping business owners create succession and exit plans. And the first step of the process – exit planning, or the process of creating the financial plan that will allow for retirement or a business sale – should be done 10 to 15 years out, Kennedy adds.
“You have to plan for unforeseen circumstances,” urges Scott Balogh, president and CEO of Mar-Bal, an integrated compounder and molder of BMC thermoset composite products. Balogh refers to these unforeseen circumstances as the four Ds: death, disability, divorce and done.
Balogh understands firsthand the challenges of succession planning, particularly for a niche industry as technical as composites manufacturing. It took him nearly a decade of preparation to take the reins of the company his parents founded, and it has been an ongoing learning process.
A Family Affair
Since its early days, Mar-Bal has grown its focus on custom molding from the production of coil bobbins and composites for welding equipment to providing high-quality thermoset composite parts for well-known appliance brands.
“We’ve changed everything in one way or another,” Balogh says of the company’s evolution since he took over as president in 1998. “When we started out, we were a shoot-and-ship molder, and now I look at all the decorating that we do, all the assembly, all the value-add service and engineering. We’ve changed a lot.”
Mar-Bal was founded in 1970 by Balogh’s parents Jim and Carolyn in Chagrin Falls, Ohio, with one press and a focus on survival, Balogh says. “It was a family affair,” he adds. He and his brother Steven, who serves the company today as vice president, began by cleaning parts in the garage and spent summers as teenagers working at the family company. While there may have been an early expectation on both sides that the younger generation would join the family business, Balogh says, Jim and Carolyn urged their sons to “go out and do it on our own for a while. The last time I worked full time for the company I was 17, and I didn’t come back until I was 30.”