Mark: Today on PowerTips Unscripted, we talked to Phillip Anderson, president of HDR Remodeling in Berkeley, California. We’ll be talking about emergency plans. You know, the hit by the bus scenario, why they’re essential for every business center and how to get started. All that and a lot more on today’s episode of PowerTips Unscripted.

Victoria: Hi, I’m Victoria Downing, your host of PowerTips Unscripted, and I’m here with my co-host Mark Harari, vice president and chief Marketing officer here at RA, and we’re going to be talking about tips, tactics and techniques to help you build a strong, profitable remodeling company.

Mark: Did you did you know what movie that was from?

Victoria: No I didn’t.

Mark: That’s anchorman Ackerman.

Victoria: God, when was that?

Mark:I think it’s a guy movie, to be honest.

Victoria:And also, like a 20 years old. Something like that, a long time. I don’t know. All right. So anyway, I’m really excited today to be here with one with our guest, Phillip Anderson. Phillip has been a long time roundtables member. I have been working with him and being in participating in meetings and just enjoying his company for many years, and I’m really excited to see that he’s about to approach the next stage in his life and that is succeeding ownership to some of his employees.

Victoria:But what I really am excited about talking about today is emergency succession plans. And, you know, like Mark said, what happens if you get hit by a bus? Welcome, Philip.

Philip:Well, thank you very much.

Victoria:Well, really glad to have you here. And, you know, you started working on this plan, on your emergency plan a while ago. And I really wanted to share it with people because I think there’s so many business owners who don’t have something like this. And as a matter of fact, my staff has been bugging me to get my act together in this regard as well.

Victoria:So what made you even begin thinking about an emergency plan in case you got hit by a bus, or became disabled or whatever.?

Philip:It started at remodels advantage, and we were doing organizational charts, and I had mentioned that on all the key positions. We had somebody in the org chart trained to step up to that next position in case there was an emergency.

Victoria:Okay. That’s good cross training, right. Yeah, yeah.

Philip:And that’s that’s what we got. And Ken Kirstein was great. And we had a dialog about it. And then I came back home and did it for myself that said okay what would happen. Okay. And that so-and-so would take over. We wrote it up. It’s on the web. There are great forms. And six months later I had a stroke and.

Victoria:Oh my God. That’s right. Geez.

Philip:Yeah. Yeah. And a remodel is advantage event.

Victoria:Yes. You have had some bad luck at some of our events, haven’t you?

Philip:Yeah, we won’t go there. And so it worked perfectly well. So there was a contingent.

Philip:Go ahead. Well, what.

Victoria:You were at that time in many boxes on the org chart.

Philip:Certainly more than I am now. Yes.

Victoria:So was there something one role in particular or two roles in particular that were specifically scary to think about if you were not there to cover those slots?

Philip:It was it was sales. Production was handled and the head of production moved up to take over the company in my absence. But what my concern was, we weren’t we didn’t have the depth we have now so that the continuation of the business relied on sales to fill the pipeline. And that was my concern, and it wasn’t worth my worrying about it because it all happened very smoothly.

Victoria:So it happens. It happened smoothly because you had taken the time to make this plan up ahead of time.

Philip:That, and I had shared it with the team that Chris Fellows would be acting manager, the general manager of the company, and so that that key part was taken care of. And other people just said, okay, I’m going to cover this, I’ll cover this.

Victoria:Okay. So when you began to get into the details, you knew it sounds like you had a really good idea of who would be stepping into your shoes in each of the various boxes on the org chart that you currently held. Right. So was there any disagreement, or is there any fear or trepidation on the part of the employees as to whether or not they had the skills to carry it off?

Philip:The concern was the length of time. How long would this go on? And in the agreement there was that this was temporary, that it was less than 90 days, 89 days. And in the in the document it talked about more long term with limited ability to come back and then total not coming back. And there were steps in each of those that the company would hire someone to run the company in the in the either part time in the second scenario or full time in the third scenario.

Mark:So you had an official emergency plan. A lot of companies.

Philip:Have emergency succession.

Mark:Plan, right?

Philip:And a lot of was published.

Mark:Okay. So and a lot of companies have a succession plan or a substantial amount have some type of a succession plan. So what’s the difference? Why can’t you just have a succession plan. And then if there’s an emergency, use it.

Philip:The secession plan that I’ve seen is that my son, my daughter, my brother will take over the company.

Mark:Okay.

Philip:But. But maybe they’re not ready for it. And I think they have to look at it from the point of view of who is able to take over today, because that bus is coming. And if you get hit, it could be, you know, today, tomorrow. So it isn’t long term. My son, my daughter, grandson, whoever will take over the company.

Philip:But I need to train them for the next three years. It’s the emergency succession plan is something that happens now. So you got to have somebody, the best qualified person is designated.

Mark:So to follow up on that, then so does does the emergency plan address the long term succession? If, you know, God forbid, you actually died. Not just something.

Philip:It’s either total disability or death. Right. Talks about all you have to do. Theoretically, if you have a succession emergency emergency succession plan, you will never use it. If you don’t have it, you need it. Yeah. That’s the rule of thumb. Well, I’m the fly in the ointment that I wrote it up, and then I had to use it.

Philip:Yeah.

Victoria:Well, you don’t like that scenario, but.

Mark:Always looking to get your money’s worth, aren’t you?

Philip:Yeah, yeah. Really? Really. So there is. So you have to at least sit down. You know, it’s couples have to talk about their notification of medical, you know, their last will and testament, their advice to physician. All of that stuff. Most people have done that, but they haven’t done it for their company. Right. So it’s that difficult decision that people have to take with medical care.

Philip:And I think that same attention should be paid towards succession plan with your company.

Victoria:So it’s not necessarily that the people who will run the company in case of an emergency will indeed be the heir apparent.

Philip:It’s bingo. That’s an exact that’s the clarity at that point.

Victoria:Okay. So it’s very probable that they are, but it’s not necessarily the case.

Philip:Right. Because they may not be ready. Right. But there’s someone who typically hits the head of production or the head of of design, or that could move up and then they could help train the heir apparent.

Victoria:Right. Right.

Philip:Necessarily.

Philip:Yeah. So you.

Victoria:Did anything. Was there any anything except cool beans? We got your back from your employees when you shared your plan?

Philip:None whatsoever. They thought it was the stupidest thing. They thought it was a waste of time. That they would never, would never have to do it.

Mark:Wow.

Philip:But, you know.

Mark:So you showed them?

Philip:Yeah.

Philip:I showed them.

Mark:There you go. Challenge accepted.

Victoria:You know, the interesting. Thing is that, okay, over the years since I’ve been doing this in 1990, right, there’s been a lot of people that have had this issue. Right. We’ve had people that have had strokes. We’ve had people that have had, you know, brain cancer. I mean, all sorts of things have happened. No they haven’t. Most of them have not passed away.

Victoria:I don’t know of any of that have, but several of them had have had to have been away for extended periods of time.

Philip:Exactly.

Victoria:Or step away altogether.

Philip:Yeah.

Victoria:So it really is an insurance policy that you couldn’t be without.

Mark:So how did you go?

Philip:You know, a skiing accident or a boating accident where you’re just not able to be at work for your recovery period of, you know, three months, two months?

Philip:Yeah.

Philip:I mean, you can do a lot of damage to your company. So what this plan allows is kind of a roadmap. And this is okay. You know, the woman who is running sales becomes the acting general manager. If you don’t want to give up the presidency. And that person steps in day one.

Philip:

Mark:So can you go into a couple just some bullet points, things that you, you were short of include. What kind of things should remodels that are listening to this episode right now. What should they be looking at doing to start the process, and what kind of things should they take into account as they put this plan together?

Philip:Okay. The first thing is do not limit it only to yourself. It should be for each key position within the organizational chart. That’s a good that if you’re that the woman we talked about who was heading up the sales department, if she was disabled for any reason, who is going to take her slot. And then, you know, it’s each one of the key positions and you have 3 or 4 key positions in the company that there should be a succession order, short term and possibly long term.

Philip:If it’s long term, you’re probably going to hire somebody, but at the short term it should be who steps up. So that’s number one. And number two is then break it out for short term intermediate and long.

Victoria:Okay.

Philip:Now Philip.

Victoria:When you’re thinking about the owner and you’ve heard about succession plans and so on. There’s oftentimes a life insurance policy that’s purchased by the company on the owner’s life to provide money to keep the company going until they can get their act together and start to rev up things again. Is that a piece of it? Did that come into play at all in your planning?

Philip:It didn’t because I didn’t take out a policy for continuance of the company.

Victoria:Do you think that it might be important, or did you think about taking out that sort of a policy on any of the key managers, were they to get hit by a bus?

Philip:We have talked about it in the management committee, and they said they’d rather not spend the money.

Philip:Okay.

Philip:And that they decided that they would rather look at the org chart pick who would be stepping up, and that we should always have somebody in the sales department, in the build department, or in design or admin who could step up. Now our admin department, if office manager Sue Wiseman is not the only person. So if she was disabled or unable to work, we would work with Judith Miller to find someone or someone locally to come in and help out and find us.

Philip:Someone.

Philip:Okay. Okay.

Mark:And Judith Miller, of course, is one of our wonderful facilitators and consultants here at advantage.

Victoria:And a master.

Philip:Quick person.

Philip:That’s one and same.

Philip:Okay.

Victoria:So how did you do it? What sort of experts did you have to call upon to help you with this?

Philip:I went online and there’s a lot of good forms and.

Philip:Forms available on the internet for small business, small service business emergency succession plans.

Philip:Okay, great.

Mark:That’s cool. You know, we should look into actually getting some of that stuff and putting it in our university library for the members. That’s.

Victoria:Yeah, that’d be a good thing. Now, you in particular, Philip, I know that another one of the companies in your roundtables group also has a emergency succession plan put into place, which you, you know, we were all talking about does there’s differ much from yours?

Philip:You know, I don’t know.

Philip:With not that we’re competitive in Krypton. But he probably did a better job. Ken probably did a better job than I did. He’s he’s so thorough.

Philip:So did you.

Victoria:You know, one of the beauties of being in a peer group, of course, is the sharing of resources and so on. So you guys talked about things and bounced ideas off of one another when you were developing yours.

Philip:Probably. I don’t specifically remember it, but, you know, we share so much.

Mark:Well, but one thing’s for sure he didn’t test it out like you.

Philip:Yeah, right.

Philip:Exactly. He had the luxury of not having to feel tested.

Philip:So, you know.

Victoria:Yours works, right? So therefore, you win.

Mark:So you win. You’re the you’re the winner.

Philip:And I’ll be happy to forward you the document for the for the resource file.

Mark:That’s awesome. Thank you.

Victoria:Great. Thank you very much. So okay, so if I’m a business owner again, what do you think would have happened if you had not had this in place when you had your health issue?

Philip:I think there would have been more disruption to the company. I think there would have been greater fall off in sales. Yeah. There would have been weeks of people, you know, waffling going back and forth. Should I do this? Should I do that, that we avoided?

Mark:It seems to me you mentioned the Victoria. You mentioned the insurance policy. And although I could see that always playing a role, it would seem to me that’s that’s more critical if you don’t have a plan, if you actually have a plan in place and you’ve got all the parts that are going to step in. If something were to happen, it’s almost like you don’t even need that insurance.

Mark:Unless of course, you have a a practice in which your name is tied to the company. What do you think about that? Right. Philip.

Philip:Right. And if you had if you were a really small shop.

Philip:Right.

Mark:Right.

Victoria:Or the other.

Philip:Thing is.

Victoria:You know, if you had if you were a company that had no money, if you hadn’t been profitable for some time and there’s no cash to keep the skids going, you know, to keep the keep the wheels rolling, you might need that insurance policy to provide you with the cash just to get through. Even if you were going to hire, you’d have somebody there for the short term.

Victoria:But potentially that person like let’s say here, right? We have Rose, who’s our sort of computer whisper. She knows so much of the tech inside and out. I don’t know who would step into her role.

Philip:Right.

Victoria:Besides Mark, who could do it, but he’s sort of busy at other things.

Mark:That can do everything.

Victoria:And he’s modest too.

Philip:But that’s that is something that you should think about.

Philip:Yes.

Philip:It is the key players. And do they have backups.

Victoria:And but the backups. Are rarely in our small businesses going to be as good. Right.

Philip:Right.

Victoria:So we need to hire somebody pretty quickly.

Philip:Typically it’s going to be a short term. I broke my leg stepping out of the car or something. I’m out of work. I’m not going to be in the office for 30 days.

Victoria:One hopes. Yes.

Philip:Yeah, one hopes so that you have your SOPs in place that somebody with limited knowledge can follow the SOPs to know, you know, if it’s bookkeeping, how to close the books, if it’s sales, how to write the sales letter.

Mark:Well, see, now that’s an entirely different episode. I know.

Victoria:Yeah, but that’s a key point here, right?

Mark:We’ll get you back on here for the SOP episode. How about that?

Philip:Yeah yeah.

Mark:Yeah okay.

Victoria:But ding ding ding right. I mean that’s exactly the. That’s exactly right. Without that you got you’ve got to it’s a lot more complicated to cover yourself in case of an emergency.

Mark:All right. Well, you know, it’s it’s that time of the show. Do you know what time it is felt. It’s. Yeah, yeah, it’s time for the lightning.

Philip:I think you’re going to publicly embarrass me.

Mark:No, no, it’s going to. You’re going to be great. I know it. I mean, you’re you’re Philip the Great, right? Let’s do this.

Mark:All right, I’m putting 60s on the clock. Are you ready to answer these questions, Philip?

Philip:I am, and I’m going to answer it real slow.

Mark:I can extend, I can slow down the clock. All right, here we go. What’s your favorite business book and why?

Philip:You know, the seven habits is, is my my go to book. If we hire a new employee, I pass it out. I think it’s just really reasonable. Every time you read it, you get something out of it.

Mark:You know, talking slow isn’t going to help you here.

Mark:If you weren’t the president of HDR remodeling, what do you think you’d be doing?

Philip:I would be a California certified trainer for earthquake preparedness.

Mark:Oh, that’s very cool. What are you not very good at?

Philip:Oh, I can’t balance a checkbook for the life of this. My husband does it for me.

Mark:Your room, your desk or your car? Which do you clean first?

Philip:My truck is my temple. So that gets, you know, waxed once a week.

Mark:If you were a pizza delivery man, how would you benefit from scissors?

Philip:Scissors? I would be able to make clown faces out of the box, top of the pizza.

Victoria:And probably get more tips.

Mark:How does the internet? How does the internet work?

Philip:You know, I’ve never understood that. I think I think it’s part it’s part mystery. It’s part voodoo. And it really doesn’t exist. You know, we all believe it exists, but it doesn’t.

Mark:Good stuff. Thank you, thank you.

Victoria:All right, well, thank you, Philip, so much for being part of this one. Before we go, I want you. Okay? I’m ready for your five words of wisdom. Let’s have them.

Philip:My five word of wisdom is it will never be perfect.

Victoria:And that’s perfect.

Mark:Well, isn’t that an oxymoron?

Victoria:It is kind of.

Mark:I don’t understand.

Victoria:Thank you. Philip, I appreciate it greatly. And your generosity is awesome. Talk to you soon.

Mark:Talk to you later. Thanks.

Philip:Bye bye.

Victoria:Wow. You know, he brought up some super good points for a small business owner to think about.

Mark:You know, I mean, the the whole the whole idea. And nobody wants to think about something bad happening. And it’s kind of goes back to all insurance in general, right. You don’t want to get life insurance, but I need it. And the kind of that Aflac thing, you know, but not to have a plan in place at all is is catastrophic.

Victoria:And, you know, a lot of things that he was talking about don’t cost money. It’s a communication thing. It’s clarity. It’s a and again, so much relies on having those SOPs in place. And you can see how important those are in a case like that.

Mark:Yeah. And I mean, you know, you’re lucky because you got me that I can do everything. Yeah. But but most people out there don’t have me.

Victoria:Pros and cons. People. Pros and cons. Right. Well, hey, I think this is a great episode. Another one in the can.

Mark:Yep. We’re going to be creasing Mark’s head so I can get out the door. And while I do that, we’re going to see you next week.

Victoria:All right. Bye. I’m Victoria Downing.

Mark:And I’m Mark Harari, and this is PowerTips Unscripted.

Victoria:I see you next time.