Everyone who has invested a great deal of time, money and energy into their convenience store should want to see it flourish after their departure.

Succession planning involves preparing and developing employees to assume key organizational roles. In family-owned businesses, the next-generation leader can come from within the family, or the leadership mantle can be passed to someone outside the family. Both options can be successful as long as the team works together to execute long-term goals, such as nourishing an outstanding corporate culture, hiring and retaining great employees and providing exceptional customer service.

In convenience retail, where businesses operate in a fast-paced, competitive environment, succession planning is crucial for ensuring the continuity and success of the store. Terry Monroe, founder and president of American Business Brokers & Advisors, says succession planning in family-owned businesses is not something that can be overlooked.

Monroe said that about 88% of family-owned business owners think the companies will stay in the family for at least five more years. However, the statistics paint a far bleaker picture. Most family businesses fail alarmingly and rarely pass on from generation to generation.

For instance, just 30% — less than one out of every three businesses — make it on to the second generation, Monroe said. These are the children of the founder. They should theoretically be in the best position to run the company. But most fail. And why is that? Because it is difficult for the second generation to understand the work it takes to create and build a business.

When the second generation was born, the business was already alive and beginning to prosper. They never had to feel the pain of being short on cash when it came time for payroll or having to create or invent ways to get business in the door.

Basically, Monroe said, it was their job not to screw anything up and let the first generation keep going until either they passed away or handed the reins over to them. Overall, Monroe posits that the second-generation owner is in the toughest situation. Beyond that, a staggering 12% carry on further and reach the third generation or the founder’s grandchildren.

Hopefully, the second generation has learned from its mistakes, but the odds are sharp against this generational transition’s success. Monroe said the fourth generation sees the business passed on to them at a rate of just 3%. By the time the great-grandchildren take over, 97% of family-owned businesses have died, and if the third generation has not sought professional help, the business will have been sold or dissolved. This has played out in the convenience store industry time and again.

Monroe said that a big part of transition failure is that leaders often have blind faith in their children and others. Running a family-owned business is incredibly hard. It is nearly impossible to keep it going from one generation to the next when handing the reins off to someone unprepared.

When beginning succession planning, company leaders should ask themselves some key questions such as: “Are you in a business that has more than one generation of life left in it?” and “Do you see the business starting to fade away and may not have enough future left to support your family for two generations?”

According to Monroe, the next question you must ask yourself is, “Will your family be capable of taking your business to the next level?” The key here is growing the business rather than running it in place. Quite simply, if a business is not growing, it is dying. There is a difference between the status quo and expansion. Expansion requires two different types of leaders and very distinct visions. Having the right person at the helm will determine your chance of success.

When company leadership begins thinking about succession planning, Monroe said it is essential for those in charge to honestly assess the reality of the next generation and understand whether they are the right people to take over the business and take it to the next level.

These are decisions that should be made early on so proper training and mentorship can begin, Monroe said, adding that top-quartile convenience store chains understand this and do a great job grooming the leaders of tomorrow. At the same time, the chains that struggle have learned this lesson too late.

What to Know

When writing a succession plan, recognize that it is not much different from setting long-term goals for the business. It is essential to understand the current state of the business, analyze the company leadership structure, identify key roles and responsibilities and assess the current workforce. By understanding employees’ strengths and weaknesses, management can pinpoint individuals with the potential to fill key positions in the future.

Identifying potential successors at all business levels is a critical step in succession planning. Encouraging leadership qualities also helps prepare staff for future roles within the organization.

Developing a succession plan requires setting clear goals and timelines to transition key positions. Establishing a mentorship program can help guide potential successors and transfer knowledge from current leaders. Documenting processes and procedures ensures that important information is preserved and easily accessible to future employees.

Communication is key in implementing a succession plan. Open and transparent communication with employees about the succession planning process is essential to reduce uncertainty and resistance to change. Providing regular feedback and support to employees involved in the succession plan can help them stay motivated and engaged in their development.

Implementing the plan involves monitoring progress and adjusting strategies as needed. It is important to track the development of potential successors and make any necessary changes to the plan to ensure its effectiveness. Regularly reviewing and updating the succession plan will help to address any challenges that may arise during the implementation process.

Succession planning is a vital aspect of organizational development in convenience store retail. By investing in developing future leaders within the business, companies can ensure a smooth transition of key roles and maintain operational efficiency. Potential benefits of succession planning in convenience store retail include improved employee retention, increased organizational resilience and a competitive advantage in the market.

Elie Y. Katz is the CEO and president of National Retail Solutions (NRS).