Scott Monaghan’s father started a specialty metalworking tool manufacturing company in Dayton in 1986. After college, Scott joined Monaghan Tooling Group as they transitioned into an exclusive master distribution business. In 1996, they partnered with a competitor that makes the products while Monaghan handles sales and marketing. Scott bought the company from his dad in 2012. His two adult daughters aren’t involved in the business, so Scott began working with Legacy Business Advisors on continuity and succession planning to assure the business continues to serve customers and support employees well into the future – along with playing a key role in Scott’s retirement plan.
At the relatively young age of 52, what inspired you to start working on a succession plan?
For my own parents, I was a convenient succession plan, as the oldest son and already involved in the family business. But my two daughters have other interests, so I needed to figure this out. I’m not an expert in succession or exit planning so I needed help.
What concerns about the future made this important to you?
If something were to happen to me, we’ve got to have a plan. My family and employees need to be taken care of, and we need a way for the business to continue to serve our customers, pay the bills, manage payroll and more. I need a plan in place and right now I don’t. That’s why I started working with Legacy Business Advisors.
For some people, it’s just a matter of selling your business. But for me it’s deeper. It’s about the long-term success of the business. Whether something unexpected happens to me or not, I still need an orderly transition of the business to future owners. I want it to go on. It’s provided people with a good living and our suppliers, vendors, manufacturing partners rely on us. It will really hurt them if we have any kind of interruption in our business.
What do you like about the Legacy Business Advisors planning process?
Their process is very methodical, well-thought-out, and planned. They’re not winging it or saying, “Hey, I’ve done this before, trust me.” It’s a well put-together procedure. We’re still in the middle of it now, about a quarter of the way into it. But I’m only 52 years old, not 65 or 70. So I’m not under the gun. I’m trying to start early and have an orderly transition.
Do you have to share a lot of information – and does that demand some trust?
The process involves gathering a lot of financial data, including personal and business data. It makes you take inventory and take notice of things you don’t usually pay attention to. Mark knows more about me now than my accountant or attorney! But I trust him, and this is what he does for a living. You just provide it all and say, “Tell me what to do!” Mark puts you at ease though and is great to work with – very pragmatic but very personable. You can tell he cares and does everything in my best interest.
How did you first learn about Mark Dorman and LBA?
I am in the Miami Valley chapter of TAB, The Alternative Board for small business owners. They provide one-on-one coaching that’s been really valuable to me. We also have monthly meetings with other small business owner who hold you accountable to an annual plan. Each month we talk about issues or challenges we face and that’s been really helpful. My coach is Bob Hothem who runs our TAB chapter, and he recommended I connect with Mark and his company about succession planning. Mark runs the Western Reserve chapter of TAB in Northeast Ohio.
What do you like about the way Legacy Business Advisors works with you?
Mark asks great questions. He personally interviewed two of my key employees who we’re trying to secure as part of the succession plan. We don’t have capital equipment so it’s really the value of our people, and the relationships and knowledge they have. Mark asked about their goals and long-term needs. It’s good to have an objective third party do this. It would be more difficult for me, but that’s what Mark does. He helped me facilitate this and takes the pressure off me. And it’s not just Mark – he has a great team that also supports me.
Is succession planning something you could do on your own?
This is definitely not something to try and do on your own – or even with your CPA, financial advisor or attorney. You need someone above all those roles, to see the big picture. And someone who has a track record of succession and exit planning. Mark and his team have done hundreds of these engagements. We may be good at running our business, but succession planning is not what we’re good at.
What about the cost?
I was pleasantly surprised. The cost is completely reasonable. It doesn’t cost a fortune – and it’s worth every dime.
Any “lessons learned” to share with other small businesses?
Owning a business is pretty lonely – but it doesn’t have to be. There are people out there like Mark and Legacy Business Advisors and organizations like TAB. My advice is to reach out, don’t do things like this on your own. Yes, it will cost you, but it will cost you more to not have a plan. You don’t have the time not to do it. It’s good for any small business, especially in my situation where I own 100% of the business with no family succession plan. I owe it to myself, my family, my customers, my employees, and all our stakeholders.
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