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Passing a company’s ownership down to a manager within the company might seem like a bumpy process but that wasn’t the case for Virginia-based Hidden Lane Landscaping in December when the company’s owner sold the business to the company’s general manager.

Throughout Hidden Lane’s 61-year history, owners have always sold the business to an employee. The $3.5-million revenue company has had four ownership transitions to date, with the most recent one being in December when owner Peter Murray sold the business upon retirement to Heather Menjivar, general manager. Murray says passing on the business to someone within the company has helped Hidden Lane maintain its culture.

Murray and Menjivar provided their input on how to prepare for retirement and how to prepare a next-generation owner within a company.

Hiring strong managers.

Finding a successor within a company means having strong managers to take over someday, which Murray says starts with recruiting motivated workers.

When hiring any candidate, Murray says he looked for a track record for success, checking candidates’ experiences in college as well as previous jobs.

To see if a candidate has a track record for success, he recommended asking potential job candidates about their past successes either in college or work. Hiring people who have been successful and have a self-starter attitude are more likely to do well at training and develop quicker.

“All of the really great employees I had did well in college, took studies seriously and at the same time were involved in various activities,” he says. “To me, that meant they could juggle multiple things at the same time. Also, they all had job experience and often worked through high school.”

Menjivar says it’s also important to hire job candidates who show they can be independent.

“Some of this you can learn from their work background,” she says. Some of the questions they ask in the hiring process are situational.

“So, when we hire, we always give them scenarios to see if they can think independently.”

Pinpointing a successor.

When a company focuses on hiring strong managerial candidates from the get-go, it can be tough to select a successor to eventually take over the business. “That was the toughest thing – to pick who might take over,” Murray says.

Finding a successor within a company depends on timing and ability. Throughout Murray’s 22 years as owner of Hidden Lane, there were a few people he thinks could have served as a good successor. Murray says the timing needs to be right for both the owner and potential successor. He cautions to not “offer the carrot too early,” either.

In addition to timing, Murray advises finding a successor who can both manage in the present and create a future for the company. He says he chose Menjivar to serve as the next-generation owner because of her ability tackle short-term tasks and to accomplish long-term goals.

“You need to find somebody who is not just great at sales or a great manager, but somebody who has a pulse on the whole company,” Murray says.

Preparing a successor.

When an owner is preparing to retire or leave, Murray says it’s essential to delegate responsibilities. He suggests owners should gradually pass off responsibilities to their successor and other managers prior to retirement, and he says to avoid micromanaging once those responsibilities are delegated.

For instance, when Murray knew Menjivar would be taking over the business for him, he started to hand off various tasks to her – recruiting, marketing and planning meetings to name a few. “It got to the point where she ran all of the meetings and strategic planning,” he says. “It was a gradual dropping (of) things off my plate and onto hers and others.”

In addition, be clear to the successor on what those delegated responsibilities entail. Menjivar says this was helpful to her when she was preparing to step up as an owner.

“Be clear and consistent on expectations,” she says. “It was always helpful for me to know exactly what Pete’s vision was and where we wanted to go, so I could get jobs done efficiently.”