Small Business Succession Planning: Another Cautionary Tale
If the CEO of a managed services provider dies, what happens to the company and its customers? That question continues to pop up in the managed services market where two untimely deaths offer tragic reminders about succession planning.
One story involves Michael Kenwood, founder of Kenwood Technical Consulting in Princeton, N.J. Kenwood, also an emergency responder, died during Hurricane Irene in August 2011. But his tragic story has grown louder across the web in recent weeks, through the work of NYSBS and GFI Software.
Kenwood belonged to NYSBS, an organization that represents nearly 300 IT business owners in the New York Metro area. When Kenwood died, other NYSBS members scrambled to service Kenwood Technical Consulting’s customers on Kenwood’s behalf. But there were some challenges since Kenwood had not documented many of his business processes.
“You can’t walk around with the business in your head,” notes Michael Klein, an executive member of the NYSBS community, in a podcast posted by GFI Software. To help keep a business going amid an executive tragedy, Klein’s podcast tells peer MSPs to document:
- Client names, contacts, phone numbers, user IDs, passwords, and so on.
- Rates and invoicing processes.
- Employees, subcontractors, and key partner information.
- RMM tools in use. In Kenwood’s case, he was running GFI Max.
- Long term, who can you sell your business to? Which brokers can help?
- Make sure your spouse or business partner knows where to find all the information.
I realize this is a human tragedy — and I don’t want to position technology as a miracle solution. But in Kenwood’s case, RMM software played a key role in keeping his business going. GFI Software agreed to waive monthly fees on Kenwood’s account until the NYSBS community could get a really good feel for what Kenwood was managing, his client base, and so on.
Now, Kenwood’s peers and GFI are striving to raise money for Kenwood’s family; he left behind a wife and two-year-old daughter.
Network Technology Solutions
Unfortunately, Kenwood’s story isn’t unique. In October, Scott Mallet, president of Network Technology Solutions, died of an apparent heart attack. Mallet was only 36. HTG Peer Groups, of which Mallet was a member, offered emergency support to NTS. Among the associated business challenges: Making sure NTS’s bank accounts — and therefore payroll, vendor payments, etc. — continued to operate following Mallet’s death.
Small businesses have always struggled with succession planning and executive contingency plans. Heck, even massive companies like Hewlett-Packard have stumbled badly with CEO succession planning.
MSP-centric organizations like HTG Peer Groups and NYSBS have certainly seen the challenges first-hand, and can likely offer peer MSPs some timely guidance on a difficult subject.