When Rhona Sallay started her own business in 1984, she didn't consider herself an entrepreneur.
A full-time special education teacher with the Toronto District School Board, she created Teachers on Call as a side business to give students the extra support they needed. In Rhona's view, her home-tutoring service featuring Ontario Certified Teachers in the Greater Toronto Area was merely fulfilling her duty as an educator.
Now more than 30 years later, the business has become a family affair. And according to Joanne Sallay, Rhona's daughter — a unique success story about family business succession planning.
"I was used to seeing businesses passed down from father to son," said Joanne, who left a promising career in commercial banking to work with her mom. "But it was rare to see a business change hands from mother to daughter."
In the Sallay family, succession planning started early with Rhona including Joanne in the business as a little girl, something Joanne hopes to continue with her own children.
"If you're involved with something from a young age, it's part of your DNA," said Joanne.
Rhona Sallay, left, tutoring daughter Joanne after founding Teachers On Call.
Still, the decision to leave the corporate world and work with her mother wasn't one that either of them took lightly.
"In the first few years we were very cautious," said Joanne. "Not only was it hard to acclimate to business ownership, but the shift away from banking felt like a career risk."
Not wanting to rush into an important decision, the two waited a couple years before transferring leadership. A wise move according to experts, who say that waiting too long to start succession planning is a common faux pas for small family businesses.
To help make the succession planning as smooth as possible, here are a few things to consider:
Start planning early: Whether you're selling the business or transitioning out, these are complex processes that can take years. All too often, business owners leave planning for late in the game and have a hard time getting maximum tax benefits.
Seek expert advice: There are many professionals who are trained in different areas of succession planning – including lawyers, accountants, business brokers, family consultants, and investment advisors. This team of experts can work with you to make sure no stone is left unturned.
Think about the lifestyle impact: Families can get caught up in the financial aspects of succession planning, and not think about what this change means for them personally. For example, you’ll need to answer questions like: will you be involved to help transition the business? What will you do after the fact? How will the business be structured, and what does it mean for the family members who will be actively involved? What will be best for the family, as well as the business? Preparing for these unknowns means fewer surprises along the way.
While the changeover from mother to daughter ultimately paid off for Rhona and Joanne, where a smooth transition led to substantial growth, thanks in part to Joanne's corporate experience, many small business owners who work with family find the process of handing their business over to someone else difficult.
Part of their success, Joanne says, was having a long-term succession plan in place to help minimize stress and to ensure her family business remained successful.
For more advice on succession planning, or to learn more about managing cash flow or growing your business, check out TD Small Business Banking.