167. Succession Planning With Russ Stephens and Sky Kolade

Welcome to another episode of Professional Builder Secrets. In this episode, I interview APB co founders Russ Stephens and Sky Coladay. We dive into a crucial topic for every growing building company. Succession planning. Succession planning is more than just an exit strategy. It's about creating a path that ensures the longevity, profitability and most importantly, the legacy of your building company. Keep listening to find out how a well prepared succession plan can make your building company stronger, more efficient and ready for whatever lies ahead. This episode of Professional Builder Secrets is brought to you by Apparatus Contractor Services. Apparatus provides full scope, end to end QuickBooks, Precision Construction accounting and CFO services for residential builders. If you feel like you can't completely trust your weekly and monthly financial reports or you feel like you're flying blind, Apparatus Root will rebuild and operate your QuickBooks accounting system and give you precision construction accounting capability you can trust. Learn more@apparatusteam.com or on the APB Rewards Partner Directory.

A lot of people predominantly get their life together, really when they have their first child. So you suddenly feel this sense of responsibility. It was like immediate. It's like, okay, no, we need to be a proper adult now and actually get this sorted because that's your motivation to do. And so if you were to think what is similar in business, you actually have a proper business and you're employing staff, it's about being responsible and having a plan in place. What is the future here? What is the plan? If my leadership weren't here, who is the successor? What happens? What needs to live on? What things actually have to happen?

Welcome to Professional Builders Secrets, the podcast for building company owners wanting to grow safely and securely. I'm your host, Will Blunt, and today I'm joined by the co founders of apb, Sky Coladay. Sky, welcome to the show.

Hey, Will, how you doing?

Very well. Great to have you on. And Russ Stevens. Russ, welcome to the show.

Thanks, Will. Good to see you again.

Yeah, great to have you both on. It's been a little while since you're both on together. So very excited for today's show.

Me too.

Today we're going to be talking about a really important topic for builders and it's something succession planning. Russ, do you want to kick us off? Why should builders be thinking about succession planning?

Well, I think especially in the construction industry, there's not a lot of residential building companies that actually get sold a lot actually end up being shut down for a multitude of different reasons. But succession planning, I'm sure this is something that's top of mind for a lot of builders. They would like their building company to be passed down through the generations. But that's not always possible, largely because the building company isn't in a position to be passed on. So by actually planning for the future properly in terms of succession, whether you plan to do that or not, you always need to have this plan in place so that the business doesn't become dependent on you and it can continue to thrive even if some unforeseen circumstances, you know, come up, which will obviously give the business greater value as well. But it's that unknown. But it's also, I guess, that known factor as well. You know, if you do have a plan to, or an idea, I should say, rather than a plan to have your building company passed on through the generations, then you've got to start planning for that to actually happen.

Scott, did you want to add anything to that?

Yeah, I mean, probably the only extra thing I'd add would be, you know, we've done an episode on this podcast before on creating an exit strategy and how you can completely exit your building company. And there were a few different options in that episode. And, you know, while you can sell the company, while you can pass it down or do any of this, there is an option in there where you can remain on as a shareholder and just bring in management, like, put it under management, other people can lead it. And that really is the main point of succession planning. It's. It's what leadership roles or who is going to be the leader of this building company. And the way you get there could be many different options, whether you sell the building company or whatever, or you just remain as a shareholder and someone else takes over as the leader as moving your building company or the building company forward and in the right direction, where their responsibility is a duty of care to the shareholders. So it's not necessarily about where we want to come from in this episode isn't about exiting and how you can get out of the building company. It's succession planning. Who do you need to bring in to take over the leadership roles? The responsibilities most likely are predominantly on you at the moment as the owners. It's the same conversation, but it's a slightly different angle, and it can get you thinking about it in a very different way. We've had conversations with members about their exit strategy, and you can go really far down thinking about what you want to do when you leave. Succession planning is coming at it from a different angle. What needs to happen when you leave, who takes that over? And it's just looking at it in a Different perspective, which can really help quite a few people.

It's very similar, isn't it, to building a company to sell, really, it's got to be systemized. You got to have all your plan B's in place. You got to have your what if scenarios covered, and that's what gives a company value. But this is obviously a very big component of that.

And really, I think the success of it hinges on your culture. Because when you focus on building your building company's culture, and that's through, you know, the core values through your team, it's through the people in your team, it's through your leadership style. What styles and what culture do you want to live on? Essentially, when you move on, what do you want remaining? And so your culture is really going to drive that and it really influences who you're going to choose as your successor as the new person in leadership to continue what you've built in your building company. So in the human body, you can't live without your heart, but you also can't live without your brain. You need both. So you need the right systems, the right metrics in place, but you also need the right culture, because without one or the other, the company will burn to the ground.

Carry on running your building company from the grave. That's what you're saying.

Yeah, exactly. In. In a very nice, nicely way put.

We take a step back for a moment, Russ. So the most recent publication of the State of residential Construction Industry 2024 report showed that over 80% of builders either didn't have a succession plan or don't know if they have one. Why do you think it is that so many builders don't have a plan, even if there is a, you know, a clear need and an importance there?

Yeah, I think it'll be really interesting to see how that percentage stands up in other industries as well, because my hunch is it's probably pretty similar across small business. You know, we. We all get very busy. We. We start the company, we continue to grow it, and it's kind of one of those things. It's important, but it's never urgent in our mind because we're not going anywhere in the short term. And it's never urgent until it's very, very urgent. Think that's probably why it just gets shunted to the side all the time. And it's kind of one of those things we see in coaching where builders do come to us with this specific plan, that they want to be coached out of the business effectively. They want to put this Succession plan in place. But they've got to that point where they've built a successful business, they've done well, they've now got their eye on the horizon, on the sunset. They want to figure out how to do that. So that's probably the 19.1% I'd say that are towards the end. But really I think what we're suggesting here is a succession plan needs to be put into place. It doesn't always have to be executed and it's not on a short term timeline that you're thinking of getting out, but it's just something that really does need to be there in place. Regardless.

I think a really good way to think about it, this might be quite polarizing because a lot of people don't enjoy thinking of this. But think of it like your will personally. Right? And I think a lot of people, a lot of people predominantly get their life together and their will together really when they have their first child. Because I know I fall into that category. So you suddenly feel this sense of responsibility and it was like immediate. It's like, okay, no, we're like, I need to be a proper adult now and actually get this sorted because that's your motivation to do it. And so if you were to think what, what is similar in business, to be honest, I think it's. As soon as you're, you actually have a proper business and you're employing staff, I think it's about being responsible and having a plan in place. If anything, if anything was unplanned to happen to you, what happens to the company, that's what actually needs to be sorted. And that's like your emergency plan. But then it gives you the permission to think a little bit bigger. What is the future here? What is the plan? If my leadership weren't here, who is the successor? What happens? What needs to live on, what things actually have to happen. And it's going slightly into a different conversation, but I think you could really link the two personally. Most people, it happens when you have your first child. Business wise, I think you got to really start seriously thinking about it when you start employing your first few people and realize, okay, this is a proper business, I now have responsibilities to other people.

Interesting point. Did you do a will recently? Will?

No, I was saying the other day I actually did one. I was 18. But it probably does need an update. Yeah.

Oh, you're well ahead of the game. 18, that's impressive. I think you're right, Scott. I mean, we should do it when we start employing people. But I think the reality is probably. I would equate the first child to probably approaching retirement age. I reckon that's the trigger. That kind of happens in business.

And I think you're right. Like, I think that is the trigger. But I'm trying to get the sense of responsibility. It's how important it actually is. Right, yeah.

What we should do is when we're 18, I think Will's got it now there.

That wasn't by choice. Mum gave me a Will kit when I was 18.

Okay, so we know who the beneficiary is.

Yeah, exactly.

Actually, interestingly, Sky, I had Toby Jenkins on the podcast recently who's speaking at summit in 2025, and he does an exercise with his audience where he gets them to calculate how many days they've got left to live based on the average age for people in that thing. And it's really quite a visceral, tangible experience to look at.

It's so funny. So we, Russ and I were at an event yesterday and we were listening to. It was Mark Boris, actually, but a couple people in there, actually. Yeah, a couple of people raised this in their presentations as well. But it was Mark Boris that, you know. How old was he, Russ? Was he 69?

69. I was very impressed.

Don't get his age wrong. But he was saying, look, if they're in Australia, the average age or lifespan you can say of a male, I think, was 81 or something. So it just sort of worked out. Like, if you think about it, if I am average, I get 12 more Christmases, I get 12 more birthdays, I get 12 more. And it was like, really just shocking to hear when you put it like that. But it's just a way of looking at, okay, that's how important is. And that's, if I'm lucky to be average, you know, anything can happen before then.

So I remember when, yeah, websites were first coming out and becoming all the rage, there was this website where you could jump onto it, you could put in a few details about yourself and your date of birth and it would predict when you were going to die. So basically, it gave you a countdown timer and you look at it and it kind of hits you, but then the countdown's going down and you, like, stop the clock. I just want to take this in for a moment. It just keeps ticking away. It's like, stop.

Yeah, it's pretty frightening, to be fair, but I think the meaning behind it is really powerful.

As I say, look. Exactly. I think when you put it like that, you sort of Realize the sense of responsibility that you've got to everyone in your life. And certainly you feel that as a family member. But if you own a business who employs people, you have a responsibility to them as well.

We should put a countdown timer in our KPI workbooks for builders, countdown to retirement. And that would help focus on things like succession planning.

Well, actually, yeah, that's. Actually I thought you were going to say countdown till death and I was like, I just don't like the angle there. But countdown till retirement. Yeah, I think that's what a way. If you were to do a business plan, and certainly the way we do it with a lot of our builders, we ask those questions like when do you want to retire? And that would be really interesting, wouldn't it? Put that date.

And APB members have been proven to live longer as well.

Could we put that on the website or. Actually, that's a good point. And we're dancing around the topic, but how closely does succession planning tie into, you know, the big hairy, audacious goals that you set for yourself and your building company?

I'm not sure it goes into the big hairy, audacious goal, but it certainly falls into the rocks, doesn't it, for the quarterly strategic planning? So it's. That's definitely something that should be on the agenda for that meeting. It might, might get done in the next quarter, might have to get pushed back, but it certainly needs to be consider with all the other priorities in that, in that whole planning.

Okay, sky, back to you. What factors make a building company ready for succession? I think you've touched on a few of them, but can you go into a bit more detail?

I would say when you have your first child. No, if we actually stay on track and on theme. Look, it would be easy to say as soon as you do like have a proper business and employ someone, but I also get the motivation and the desires in your own personal timeline when that would come up for people. So if we remove all of that off of the table, what does the actual company and business look like? Well, I think you need something that's substantial. And I'd go a step further to say you don't have a business unless you are profitable, unless you have systems in place and you have a team behind you that can actually deliver the product like that. That's you're in the territory of a proper business at this point. If you have a company that can't pay people or yourself a full salary if it's not profitable, or if you have no systems and you're just winging it every day. It's definitely more in line with a hobby that you can make some pocket money from. And that can be insulting to quite a few people, but it is the truth. If you look at these successful businessmen and women around the world, they run proper businesses. And a lot of the time, a lot of the time in small business, it's just not the case. Things are not run as professionally or profitably. So I think when you can look at your building company and know that it is systemized, you have a company manual in place, you have a sales manual in place, you know the entire sales process, you know all of your key metrics and ratios for when you get a lead, how long it's going to take for them to be a contract. Hopefully you're still there, Will. And then of course it's got to be profitable. So we teach at APB that as a building company it needs to be making a minimum of 10% like double digit net profit margin. So it has to be achieving that. When you see yourself in a position that you have a proper business, a proper company, that's when I would really look ahead. What is your succession plan? That's when you are really ready. I'd say that's when it really should be in place and should be done right. We always talk about start with the end in mind. So if you are starting a building company, you've just set it up or you're doing any kind of planning, I probably would fast forward and really work out. Okay, when do you want to retire? What does that retirement look like? Do you want to have this building company all the way up until retirement or is this a vehicle to get you to the next stage in life? Two answers there. You want a proper business. And once the proper business is in place, I think it needs to be in place too. So if you rewind all the way to now and you're even planning out your building company, that's when you really need to start working out. Okay, I probably do need something in place and I think you need to work out ideally what that looks like for you first. Because until you understand what your exit can look like, it's hard to put in place. What does the succession of the company then look like? Because it could depend, right, depends what you want to do with it.

So it's all the factors again, isn't it, that make up a company that has value, that can be acquired by someone. So it's got to be a valuable asset. And the trouble is A lot of residential building companies are not. There's always this assumption that, you know, something of value is being handed down. But then a lot of builders get quite surprised when the next generation actually decline the offer, you know, with good reason as well. They, they see how hard that, you know, parents have worked in this building company and I, I don't really want that life. Yeah. And that really should be a kind of a clear signal that this thing that you've created really doesn't have any value. It maybe you've just created a job and a job with a very low hourly rate and long hours in it. So the factor there, it's got to be a valuable asset and probably on that as well. I think we got to look at it from the recipients point of view as well, because this is, this is an emotional transfer, isn't it? I think everyone values their business emotionally higher than it's really worth. You know, we all think our companies are worth more because we see things from a different perspective. But this is why, you know, value as brokers, etc. They can come in with a more realistic approach and really look at that value objectively. And that really has to be how the recipient is looking at this as well. Because I think there can, can be maybe even a bit of status involved there where, yeah, the recipient might look at it and think, you know, this will give them status because, you know, it's their parents business, you know, kind of coming down the chain and they want to be that person, you know, in control, you know, at the top. But really, is it worth taking over? Is it worth what is, is even being offered? Because, you know, it's not always a case that this business is just going to get handed over either. I mean, we've seen some terrible deals, really, you know, terrible in respect of the, the recipient where they're just not fair. And yeah, it wasn't. I wouldn't say that the parents, you know, sought to rip off their kids in, in any way, but their perception of the value of that business was just not realistic. And the next generation come in, they take it on and they take on a whole load of liabilities and they work away and they realize there's just, they're going to dig themselves out of this hole, you know, and that's because they haven't looked at it objectively. So I think it's really, really important that because you are the person doing the succession planning, you're in the box seat of this place. But you got to look at it from the Other person's perspective as well. You know, is this something of value that anyone would. Would want to take on?

I think we discussed this in another episode, sky, about family businesses in the building industry. Is there an assumption that. That a family member will want to take on the business?

Yeah, I remember it. It's funny because the same example came to my mind as you were talking just then, Russ. And I remember that I had already shared this story, but it's just such a vivid story or a vivid scene that just came to my head. And I remember I shared it on either the running a family business podcast episode or the creating an exit strategy. It was. We were working with a building company. We were doing. It was like a live in person workshop. There were maybe half a dozen to a dozen building company owners in the room. And one of the building companies, the, we'll call him the dad, was in the room, but then his son was in the room as well. And by all accounts, this was a succession plan happening, right? Like we talk about, we want the successors, the new leaders, whoever's new taking over the building company, to be experienced in that building company, to have worked in that building company, to know the roles, to know what has been happening in that building company. And so you could actually see that that was the succession plan playing out there and then. But I remember what the son said to me that day and he said, I don't want this building company. I'm just taking on all his problems because they were basically working on together, like trying to improve this company. And it was the dad who shared, I'm going to do all this work to fix it and he will get all the benefits. And there was just this conflict that was happening in front of our very eyes because the building company was in a state. They're working to fix it. And you can see blue sky. You could see like where we were going, there was light at the end of the tunnel. But it's almost like they were both bitter about it. They were doing all of this work and then, you know, when it does get handed over, there were other siblings and it wasn't going to be, you know, not all his. And he did all the work, whereas the dad had the building company his whole life and it was rubbish up until now. And then the sun, then the sons get it. So the, the example is just. And you know exactly who I'm talking about, don't you, Russ? Like I remember that example.

No, but that, that is another factor, isn't it? Is the value then as well what is going to happen with this succession plan? Is it just going to be handed over and one generation is going to walk away? If it's like a family thing, is there going to be some kind of compensation involved? What we've seen a lot of times is that there is an ongoing payout kind of implies and expected kind of forever. And that's never going to work.

So this is all happens in the real world. If I can interrupt, like, if you would actually sell your. Like, that doesn't actually happen. Like, there are, There's a value exchange there. So, yeah, until that person dies. I've been there with conversations where the son or daughter or whatever just say, like, oh, they worked their whole life, they deserve it. The building company is not your super. The building company is not your retirement plan. And this, this is really important to understand. I know we've done a few different episodes on this, but your building company is a business and anyone's business is a vehicle for their wealth creation. It's not sort of where it starts, is ends. Do you know what I mean? Like, it is a way for you to generate wealth, but you then do that separately. Your building company is a business, so it doesn't owe anyone anything for a lifetime.

You know, let's be realistic. The value is probably around two to three times net profit. So that is probably way below what a lot of people that maybe are not familiar with how companies are valued. You know, that may be way below what a lot of people might be thinking it's worth. And then they'll kind of enter into this, this plan and set it all out with a totally unrealistic expectation of what they should be getting out of.

It afterwards, I think there's power in actually knowing that. Because when you realize, like, oh, okay, and it makes sense logically, it's a couple years of the net profit, that's what I can expect to pocket in a sale. You can become a little bit more realistic with your expectations, but then even your goals. If you're thinking, well, mathematically, I kind of need a little bit more than two or three years of my net profit, why don't I just remain as a shareholder, keep having the net profit and then put it under management, Someone else can run it, and then I get to, quote, unquote, retire. And that is my succession plan. A successor in place. They've taken over the leadership, but you're not tapping out at two to three years worth of net profit. You can keep getting that, but that's because you still own the Building company. You know what I mean? Like, there's, there's power in knowing what realistically happens with a building company and, and what is salable.

Yeah. You got to reflect the market place, really, haven't you, to be fair and equitable to all parties.

Yeah. For anyone wondering, episode 85, sky working with family and episode 39 was creating an exit strategy. So you can jump to those episodes, obviously, after you finish this one.

Perfect.

You touched on the successor themselves. Whether it's a family member or someone else that you grow, that grows into a leadership team, maybe starting with you. Sky, how can you prepare a successor? What do you need to do?

It can be done because it is done in way bigger companies than your building company. And I mean that with all the respect in the world. But I think as soon as you realize that a lot of people do this, a lot of people have done this, and to be honest, in way more complex, bigger, more profitable, more complex companies than yours, it's no longer a huge mountain you need to scale. It might be a big deal to you and because this is your first company and only company or whatever, but this gets done all of the time. So let's actually objectively look, what can you do to make it easier? I want to come all the way back to something I said right at the beginning. I think the culture is so important because if you bring a new leader, a successor on board to take that over, you haven't really prepared them or your team to have that person in place because it's not going to gel. Right. You need to bring on someone that is well respected in your team for that. I'd probably say just involve them as early as possible. The person who comes in as your successor needs to understand your building company needs to and what it does day in, day out. It needs to have a very thorough understanding of every single role. Who works in those roles? Why do they do what they do? How does it impact the other person's role? Like they need a lot of experience, they need a lot of training. I don't want to say hand holding, but they do need a lot of direction on what is working in your building company right now. What have you tried and didn't work? Where do you want to go? What is the culture? It's a very, very thorough onboarding for the right. Not necessarily steer the ship in a different direction or even the right direction because you might not even be on the wrong path, but just continue the legacy that you have built right up until this point. I think that's some of the most important things that they can either get involved with before they take over or as they are taking over. It's a proper handover. And I do want to say this as well. Even if you sell your building company or anyone actually who sells a company very often, unless it's a kind of a takeover where the person buying the business is just swallowing it up and they're just like taking all the assets out, taking the team and whatever and integrating it. A lot of the time when someone buys another company, that owner or whoever, the leader or whatever is part of that buyout deal is that they remain on for whether it's a few weeks, months, maybe years to actually do that proper handover. Look around, look at what actually happens in other industries, more complex industries than yours and you'll realize like it'll be a lot easier to do it in a building company because it's not a multi billion dollar company. It's going to be simpler and we can do it faster and here's how we can get it done. So just look around like there are clues.

Yeah, you got, you got to bring them into management roles and then senior management roles and you've got to be prepared to coach them all the way through that as well and share your experience and enable them to, to succeed and have that sounding board. Because yeah, it might be difficult for as well coming up through the ranks. But I guess the most important thing is you got to get out of their way as well and allow them space to grow into. Because if you've created your building company from scratch and grown it, you've probably got a very tight handle on all aspects of that business and this can be quite difficult to let go of. But if you don't let go and get out of their way, they're not going to be able to grow and thrive either. So I think that's a very important thing, something we do see quite a bit of as well. You actually hold people back by holding on to things and not getting out the way.

This is the most common in. It's all of the family run building companies. To be honest. This is especially true when if you as the owner, you bring in your children, like adult children kids, but they're adult children. You've brought them into the company and it can go one of two ways. There's like this, this crazy nepotism where you just put them in a leadership role and they know nothing and it can be the worst experience ever for the rest of the team. And you know Your entire building company, because you've put them in, they've had no experience, they've not done the role, they've not worked in construction, they just did marketing, you know, somewhere else. They're amazing and they just get put in this leadership position or they're expected to run the company and doesn't really do much for the culture. But then some people go the other way. They've brought their kids into the company, their adult kids, they're just sort of holding them. They're holding them below the water. They're holding them at a particular level in the company because they started this, they're the leader and they don't want to see them grow or do anything else. Just as Russ said, you've got to get out of the way. I can think of actually two examples of companies we have coached where that was almost like the demise of the entire company. The dad just couldn't get out of the way of the children, let them run. They had the respect of the team. They could run it, but they couldn't let go. And if you're bringing people in to be a successor, that's the ultimate sign of success. When you can walk away. Don't get so insecure that you feel like you need to self sabotage or sabotage your company or your kids because you can't get out of the way. It doesn't end well. And ultimately no one gets what they want want. But if you, as Russ mentioned, mentor them, if you lead them, if you get out of the way, everyone gets what they want and it is a happy ending. It's just hard, I think emotionally for some people to, to do what is.

The perfect amount of time, Russ, to onboard someone or train them up ready to take over a building company.

I think it will obviously vary on the person coming in, their ability and experience, but. But a rule of thumb is starting off with a 12 month expectation and it can be shortened from there. Typically what you do see in these transition periods is anything from three months to 12 months. But even something at three months that can be shortened considerably. Typically the staff will adapt very quickly to a new leader coming in. I think it's always a bit shocking for the outgoing leader to see how quickly people have moved across to the new leader. I know, yeah, when I sold my company in England, I had a three month period and yeah, crikey, within a week I was no longer the boss. Even though, yeah, I was still kind of working there, you know, on and off for three months. But yeah, so it does, it does happen quickly. But that really is a lot, lot down to the, the incoming person and just how quickly they, they stamp their mark on the place. I would say, sky, it sounds like.

The person you choose as your successor is pivotal to the success of the succession plan itself. So how do you pick the right person so they gel with your team and it doesn't all fall apart?

Oh yeah, Million dollar question or potentially more. Look, obviously that's given the assumption you get to choose the successor. Obviously if you sell the company, you'd sell into a buyer, right? But let's go with the assumption that you are choosing a successor to take over all leadership responsibilities in the company. You get to sit on an island somewhere and by the time you get to this point in your building company, I'm going to also make another assumption and say that you should really know how to pick people by this point in time. I think if you are getting to this point in the building company, you have a proper business that's profitable, you've got systems, you've got people in place. It means you've probably hired a few people before, at least a few, and hopefully hired some leadership positions. So you've become that little bit more skilled in hiring a leader already. This, I'm sure is going to be like the overarching leader or the most important role. So I think your whole recruitment process and the skills that you've learned from hiring in any role in your building company is going to stand out here because it still is hiring. Now whether you find this particular person already within your building company or externally, I believe is the question. And so it's working out if you are grooming the right people internally. I mean at the end of the day, the right people in the right positions within your company, you can spot leaders, you can see who's moving into leadership roles and responsibilities based on how they act and behave. And then are you nurturing them and are you mentoring them? Because you'll probably be able to to spot who that person could be within your team. And it's a sad day when you look at your team and think, I don't want any one of you running the company. And that's when you need to look externally. Right. So you know, there's maybe a conversation to be had there. But I think you want to be looking internally because again, someone actually understands the culture. They hopefully already have the respect of the team. They know they're building companies, day to day operations, all the ins and outs of it. That is going to be ideal. But if you do have to look elsewhere, that's when you really got to rely on your hiring and recruitment skills and you're looking for the right person. You're looking for a huge culture fit. And I tell you what I actually did to hire all the leadership positions in apb, rather than looking at all of the role and responsibilities that I was hiring for first, I think they were all written down anyway. I actually mapped out the person and all the personality traits and all of the characteristics that the people had that I was looking for first. So I was very clear on who the people were going to be to join our team and then the skill set that they had to have and the experience and responsibility. I think at the end of the day, anyone in a leadership position, who they are as a person really matters because they're there to lead people and they can encourage, for lack of a better word, they can continue the culture that you already have or they can burn it to the ground. And so the people really matter. And I think if you're hiring externally, you've got to get really clear on that. If you're hiring internally, they should already be living and breathing that culture and then can find the respect on the way up.

Yeah, that's a great point. I think that it comes back to the values alignment then, right?

Yeah, yeah. Because at the end of the day, you can put someone in a leadership position, you can put someone in a role and you can say that you need to follow them to the rest of the team, you need to respect them, but that doesn't really work. People do have agency and they can choose whether they're aligned with someone or not. And you don't want to make the wrong choice and have the team leave at the end of the day, kind.

Of, I think, like, feeds into some of the mistakes really, that we see being made. And apart from the obvious ones where the company is not systemized properly, there's not documented processes, obviously, that's like a big red flag. You've got to have that sorted. They're not financially sound, which means there's just ongoing cash flow problems that have to be sorted out. That's running the company is a bottleneck. So everyone's feeding. True. But one that really is a common mistake, and it's something that flies under the radar, is that when you do bring someone in a new leader and have them take over, your role is changing as well. Because you are now becoming an investor, you're taking the big step up, you're transitioning away from being A manager to an investor. And that requires a different mindset, a different skill set. And that is something that you probably need to be coached through to do it effectively. Because, yeah, none of this stuff is natural for us. We don't just kind of walk in and start becoming carpenters without a bit of training and then running a carpentry team without knowing a bit about running a business. And obviously a building company is one of the most complex businesses that you can operate, so everyone needs help with that to make it successful. But that next role, an investor, that is a very different skill set. You need to be aware that you're going to have to change and adapt to that new environment yourself.

Sounds good. Well, I think we've done a nice. Sorry, a nice rundown on succession planning. Russ and Sky, I appreciate you coming on the show today. Sky, any final advice for builders when it comes to succession planning and getting started?

If we've had the exposure to the information and hopefully by the end of this episode, it's really resonating and you're understanding just how important this is, even if it doesn't necessarily have to be. Put your succession plan in place tomorrow. But I think the earlier you start thinking about it. So really let this information land, let it swirl around your head for the next little while. Really just have some planned thoughtfulness on this topic and even just get your thoughts down because that is taking action. In a sense, this is a big conversation and a big topic. So get your thoughts gathered, get your head around it, and then start documenting what your thoughts are and then consult someone. Talk to your coach, talk to your mentor, talk to your business partner and try and get on the same page with what the exit for the company looks like for you and who is the successor. Not necessarily naming a person, but who is that person? Who do you want to be there and start thinking about it now and then put in place in your next quarterly strategic plan. A rock or milestone doesn't have to be nailing the whole thing, but how can you breadcrumb it? What needs to happen next? And you can achieve this and kind of like a will, it's not set in stone. You get to update it. So get something down, get something planned. Because yeah, you want to be part of the minority in that stat. It was like 19%, wasn't it, of building company owners actually have a succession plan. Try and be part of that group, group, not the 80% who don't have one. Because the clearer you are on where you're ultimately going to be, it actually makes your day to day decisions a lot easier because you're asking yourself if it's getting you towards that or further away from it. So I think start, but you don't have to go all in, just start somewhere.

Where's the best place for people to go next?

Sky well look, obviously if you're a member of apb, we've done entire training on creating an exit strategy and you know what the different options are and where you can go. So if you are a member I'd actually go through the action plan because it's a full play by play training of what questions to ask yourself where to go. If you're new to APB and you're new to this information, I'd probably just head to our blog because we've done some bits of information on this as well and I think just continuing to get a little bit more information and get your head around it to let those thoughts percolate. I would get in touch with touch with all of our content and just stay immersed within the APB content sphere so it is percolating around your brain constantly.

Perfect. And there was a few podcast episodes that people can refer Back to. Episode 39 which was creating an exit strategy, episode 85 which was working with family and episode 109 with our executive business coach Rick Moore on Building to Sell is also one which is worth checking out for this topic. But Sky Russ, thanks so much for coming on Professional Builder Secrets today.

Thanks Will.

Great time.

Also a big thank you to our listeners wherever you are in the world. If you like the show today, please subscribe to Professional Builders Secrets on your platform of choice and if you're feeling generous, leave us a review. But until next time, have a great day.