Business training and a long family history in entrepreneurship still weren’t enough to prepare Margaret Clark for the challenges of passing a business from one generation to the next.
The seventh-generation owner of Clarks Hardware in Ellicott City, Maryland, Clark grew up working in the family business and went to business school. But she still doesn’t recommend tackling a succession plan on your own. Margaret Clark became the seventh generation to own the family business when she bought it from her father, Andy Clark, in 2017. Seeking outside help was critical to her own transition, she says.
During its more than 170-year history, Clarks Hardware has survived two world wars, economic downturns and hurricanes. And each generation has had to deal with the challenges of passing the business from one owner to the next. Every time, those challenges have changed. Clark’s father, for example, never had the opportunity to craft a formal succession plan. He and his brother left the armed services to run the store after their parents were killed in a car accident.
“Anyone who is going to be buying a business needs at least three people: a succession planning consultant, a lawyer and a banker.”
—Margaret Clark, Clarks Hardware
Clark was one of five children growing up in the family business. Her siblings now have occupations elsewhere, and up until a few years ago, Clark didn’t have a career in hardware in mind either.
“Despite the long family history in the business, my parents were always clear that we were never expected to take part in the business,” she says.
After serving in the U.S. Marines, Clark went to business school and a few years later returned to the family hardware store where she began working in various leadership capacities and learning more about the inner workings of the company. As her father neared retirement, she began to pursue the idea of succeeding him as owner. She finally purchased the business toward the end of 2017, about two years after she and her father started talking about their succession plan. In hindsight, she recommends starting a lot sooner.
“I’d recommend taking a couple of years just to learn about the process and go through more training,” she says. “Have a conversation as far ahead as possible with the current owner you’ll be replacing.”
Clark hired a consultant to help guide the succession planning process. She says that move was critical to the successful transfer of ownership. She also found a lawyer she could trust and a banker to help with the financing.
“Anyone who is going to be buying a business needs at least three people: a succession planning consultant, a lawyer and a banker,” she says. “Then try to get as much knowledge as possible, anywhere you can get it.”
Understanding the succession process is only part of the preparation, Clark says. She recommends having at least a basic understanding of accounting and the inner workings of a business. While she gained a lot of experience working on the salesfloor and in management, Clark never had much exposure to the financial side of the business, which gave her a lot to learn as she started exploring ownership.
Finally, be aware of the personal dynamics at play, Clark says. There will be some difficult discussions, especially among relatives who have a lot of personal investment in the business.
“Be respectful of each other,” she says. “If you need to have a potentially heated discussion, whether it’s business or personal, do it at home, not at work.”
Ellicott City, Maryland
Clark’s family never talked about succession planning until it was time for the transition to happen. The topic was never discussed in business school, either.
But her move into ownership was successful because she hired professionals she trusted who specialized in family business and were qualified to help navigate a succession plan. She also looked for further business training anywhere she could find it, including from her distributor.
“Have a conversation about your succession plan as far ahead of time as possible. Also make sure you are prepared for ownership by understanding all of the internal workings of the business, including a basic understanding of accounting,” says Clark.
Staying viable for 174 years has meant Clarks Hardware has had to adapt to market and economic changes. Clark says that is the strategy that will carry them into the future. “Constantly learn
and improve yourself,” she says. “Know and watch the trends. Maintain a high level of customer service. Those are the reasons we’ve been in existence so long.”