As 2023 turned into 2024 and this industry saw the shakeups, sales, and forced closures of several large growing operations, our team at Greenhouse Grower communicated constantly not just with the growers who were facing challenges, but with companies like PivotPoint Business Solutions and its partner companies. So, when PivotPoint announced it was conducting a survey on the state of succession and exit planning in the horticulture industry, we were proud to partner with them.
The results of the survey were first unveiled during a presentation at Cultivate’24. The PivotPoint team also wrote a great article with some key insights from the survey; that article can be found here. I wanted to offer some of my own biggest takeaways from the survey.
Even if you as an owner are prepared to exit the company, your business might not be. I was surprised to read that while 58% of business owners were personally prepared to exit, only about 30% (or to put it another way, a “3” ranking on a scale of 10), of the businesses were ready to transition to a new buyer. This goes into my next point …
Only 34% of owners with a succession or exit plan have shared it with their management team. As the report notes, “Your key management team is integral to your transition. Train and mentor them to be your replacements. When actively engaged, your people will reduce owner dependence and enable the business to function well in your absence.”
Having paper or electronically documented standard operating procedures (SOPs) is critical in both training new employees and preparing experienced members of your team for leadership roles. Yet according to the survey, 37% of businesses had no SOP documentation, with many relying on either memory or verbal communication. You don’t want to learn the hard way what happens when you don’t have a documentation process in place.
I was struck by how technology plays a role in the value of your business and that, according to the PivotPoint team’s survey analysis, “It’s irrelevant if the current team is comfortable with the technology or if it was custom developed by the owner.” As a business owner, you need to understand that the standard for evaluating technology is set by potential buyers. While you might see the technology in place at your greenhouse as acceptable, the next possible owner might not.
Perhaps the toughest reality check was the issue with the family name being included in the name of the business. If you’re the head of a multi-generational family business, you’re no doubt proud of the legacy that’s been created. But if the odds are likely that the next owner of the business will not be a family member, that family name doesn’t matter, and could actually negatively affect the sale of the business.
I’ll close with what stood out to me the most: the survey showed that while 72% of businesses rated the need to have an exit plan as a moderate, high, or very high priority, nearly 60% do not have a documented exit plan or strategy. Just take a look at the headlines from earlier this year about several of this industry’s largest companies closing because they did not have an exit plan, and you’ll understand why being prepared is imperative.
