This is Part 2 of a series of posts on closely held businesses and transition issues.
Your transition from founder-led to professionally managed won’t occur overnight, so it’s not too soon to begin thinking, or even to take some action steps. Do your homework early so you’ll know what to expect, what moves are most practical and feasible, and how long it will realistically take to implement your plan.
For the business owner:
- Create a formalized longer-term plan for the company and include your potential successor in the process (if he or she is already inside your business.) You will have the opportunity to incorporate your years of knowledge into the plan, and will be able to define specific steps to prepare the new leaders and yourself for the transition. If you will be selling your company, create a plan that determines the steps of marketing the business, your wants re: exit timeline and level of involvement after the sale.
- Consult with your professionals. Your attorney and your accountant, financial planner, etc. are valuable resources on the topics of business valuation, own vs. sell decisions, and estate planning BEFORE you finalize your plan.
- Develop and/or recruit the professional managers that will be running the company once you’re not involved in the day to day running of the operation (if you’ve decided not to sell it to an outside party.) If you do decide to sell rather than hold this business as an asset, a solid team of leaders broadens your base of prospective buyers. If you choose to develop employees who are already in the business, your steps might include coaching and/or training, or assigning special projects that develop their skills in new and/or broader areas.
- Start determining what your life is going to look like after your active involvement in this business. It is not uncommon for it to play out like it did for a business founder we know – she said she wanted to retire, but she kept pushing the exit date back. It was hard for her to turn her “baby” over into the hands of someone else. To compound issues, she didn’t have outside plans attracting her away from daily business issues.
If you’re the heir apparent:
- Absorb as much information as you can from the founder. Even if you heartily disagree with their style of leadership, or even with their strategic direction, you can benefit from what worked well for them all these years.
- Give yourself an observation period. Once you’re in the top block on the org chart look around so you can evaluate the business from an all-encompassing perspective before you act. Take your time implementing sweeping changes. You might be surprised at how different the business will look to you once you are in the driver’s seat.
- Incorporate goal planning into your leadership methodology. Beyond its value to prevent you from wasting energy on impulses or projects du jour, goal plans can be effective tools to communicate your intentions with your staff, and/or with the founder (if the transition has them continuing some limited involvement.) Buy-in is greater (and they take more action) when they understand your intentions, and it’s even greater than that when they have a say in the planning.
- Engage a developmental coach. If you want to speed up your ramp-up time, work with a neutral outside party who will help you with more than transactional issues. They can help you leverage your strengths to transform yourself into the leader you have the potential to become. There will be a direct connection between your leadership effectiveness and the successful continuation and ongoing growth of the business.
- Connect with other leaders. Trade associations or Chambers of Commerce can help to integrate you into your local business environment. Or if learning and mentorship are more important to you right now, you might join a Mastermind Group, a Vistage group or Young Presidents’ Organization where you can continue to learn among a group of non-competing peers. Or consider forming an advisory board of business leaders with whom you can test ideas and be accountable for results, and from whom you can receive input.