When Rhona Sallay started her own business in 1984, she didn't consider herself an entrepreneur.
While working as 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, 40 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.
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 of years before transferring leadership. While Joanne and her daughter got started on their succession plan early, waiting too long to start the succession conversation is a common faux pas for small family businesses.
What is succession planning?
A succession plan gives a clear outline of what should happen when you exit your business to a new leader or owner. By having a succession plan in place, you can make the transition smoother for yourself, your family members, and employees while also maximizing the value of your business.
TD recommends succession planning three to five years prior to your planned departure.
Some advice for succession planning:
Start planning early: Whether you're selling your business or transitioning out, these are complex processes that can take years. All too often, business owners leave planning for late in the game. This can lead to confusion and headaches down the road.
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 – each of whom can help you when it's time to pass down or sell your business.
Think about the lifestyle impact: Business owners can sometimes get caught up in the financial aspects of succession planning and may not think about what this change could mean 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 with your time after your exit? How will the business be structured, and what does it mean for the family members who will remain actively involved? What will be best for the family, as well as the business? Preparing for these unknowns may help avoid surprises along the way.
Succession planning in advance can make a difference
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. However, many small business owners who work with family members 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.