What Manufacturing Owners Need to Know About Staying On After the Sale
February 11, 2025 | by Seth Getz
The manufacturing industry is entering a critical period as Baby Boomers approach retirement, creating a major shift in the workforce. Through 2027, about 4.1 million Americans will turn 65 each year, a trend identified by the Alliance for Lifetime Income’s Retirement Income Institute as the “peak 65” era. With over a quarter of the manufacturing workforce already aged 55 or older, this wave is set to reshape the industry significantly. The Manufacturing Institute estimates that by 2033, the sector will need to recruit 3.8 million new employees to replace retirees and meet growing demand—yet, nearly half of those positions could remain vacant. This labor gap is intensifying the need for thoughtful succession planning.
For manufacturing businesses, this retirement wave also presents a chance to secure a sustainable future. As seasoned leaders prepare to step down, companies have a unique opportunity to implement structured, supportive succession plans. Proactive planning not only helps businesses transition leadership smoothly but also ensures continued stability, quality, and reliability for years to come.
Understanding the Importance of Succession Planning in Manufacturing
Manufacturing business owners are known for their commitment to their companies. For many, the business isn’t just a job; it’s a lifelong project. But planning for a future where the owner might not be at the helm is crucial for ensuring continuity. With a comprehensive succession plan, businesses can continue to thrive and employees can feel secure knowing there’s a roadmap in place.
Warren Buffett, for example, has long been a proponent of having a clear plan for leadership transitions. For years, he has reassured investors that while he remains engaged with his company, there is a plan in place for any eventualities. Manufacturing business owners can take a page from this approach by developing plans that provide continuity, stability, and peace of mind for everyone involved.
Core Elements of a Strong Succession Plan
1. Identify the Right Successors
The heart of succession planning is about identifying the who. Whether it’s a family member, a long-standing employee, or an external buyer, it’s important to choose someone who shares the company’s values and understands what makes the business unique. Transitioning ownership is as much about finding the right leader as it is about transferring assets. By clearly identifying who will take over, business owners help preserve the culture and values they’ve worked so hard to build.
2. Document Core Values and Traditions
For many businesses, values and guiding principles have been established over decades, often learned by example from the owner. But for a successful transition, these values need to be written down. Going from an “oral tradition” to a “written tradition” ensures that future leaders and employees can continue what the founder started. This is a good opportunity to reflect on what makes the company unique and what has contributed to its success over the years.
3. Build a Team of Advisors—Inside and Outside the Business
Successful succession planning often requires expertise beyond the company’s day-to-day operations. An accountant, attorney, and other advisors can help navigate the complexities of ownership transfer and ensure that all aspects of the transition are covered. These outside experts provide a layer of support that makes the process smoother and helps avoid surprises. Building a knowledgeable team that’s aware of the succession plan is a proactive step to protect the business and its future.
4. Establish Quality Control Processes
Many smaller businesses rely heavily on the owner’s eye for detail. But as the business transitions, it’s essential to create a formalized quality control process. This helps the business maintain its standards, even as leadership changes. A strong quality control system reassures both employees and customers that the company’s commitment to excellence will continue, making the transition feel seamless.
5. Practice Letting the Business Run Independently
One of the best ways to ensure a business can thrive without the owner’s constant presence is to step back periodically. Some business owners take short breaks to test how well the team handles day-to-day operations without their oversight. This allows them to see where gaps might be, address them, and ultimately build a more resilient business. It’s like preparing for any major change—by stepping back, owners can identify and fortify any weak spots, giving their team room to grow.
6. Have a Vision for the Next Chapter
Many business owners find it hard to step away simply because they love what they do. But having a clear vision for “what’s next” can make the transition easier. Whether it’s spending time with family, pursuing hobbies, or even a new business venture, having something to look forward to can help ease the shift. For some owners, having a new purpose makes it easier to hand over the reins, knowing that they’re moving on to another fulfilling chapter.
Taking Steps for a Seamless Transition
Succession planning in manufacturing doesn’t necessarily mean the owner has to leave right away; it’s about preparing for a smooth transition whenever it’s needed. By putting the right structure in place, the business can operate effectively, even if the owner is less present or chooses to retire. This preparation ensures that employees feel secure, customers continue to receive reliable service, and the company culture remains intact.
The “retirement wave” in manufacturing is a call to action. Rather than seeing it as a challenge, business owners can view it as an opportunity to reinforce their legacies, create stability, and set their companies up for success. Succession planning is ultimately about valuing the people, practices, and principles that make a business unique.
