I Want to Retire Soon Have Not Gotten a Clear Plan for Succession in Place

Someday you’re going to leave your business. When this day comes, you’ll want to have options. Too often I see owners get to the end of their business career, have no idea what to do next, and their outcome is less than what they want.

This is not something I want for you. I want you to know what your options are for your business, and how you can take advantage of what’s best for you.

Here are some challenges that can ruin your day.

The first challenge you’ll have is first understanding if your business is saleable, and if it is, deciding what strategy you’ll use to sell it and who you’ll sell it to.

If you plan to sell your business to an outsider, you have to make sure your business is sale-ready. If you want to sell your business to managers or children, there are other challenges you’ll face.

Here are some other things that can get in your way:

1. Finding a way to let go. After all, you’ve been running your business for years. Having someone else come in and take over will be challenging for you. You’ll wonder why the new owners don’t follow your systems.
2. Transferring knowledge. If you’re like most business owners I work with, documenting how things are done is the last thing you want to do. The question I have is how do you plan to transfer all that institutional knowledge stuck in your brain?
3. Identifying your successor. You might want to transfer ownership to one or two of your managers. What about the other key people you need, but don’t want them to become the next generation of owners? This is a challenge you’ll need to overcome.

What things do I need to do to start a succession plan?

The list of things you will need to do to transition out of your business is long. If you start with a complete list, there’s a strong chance you’ll never get around to putting a plan together. Start with no more than three items.

Here are three I think is a good place to start.

1. Identifying your successor. I can’t tell you how many times I ask an owner who wants to transfer ownership of their business who the successor is. My next question is, have you had a conversation with them about taking over yet? Too often, the answer is no. If you want to do an internal transition, you need to start this process years in advance. Waiting too long can ruin your chance of having a great transition.
2. Training the next generation of owners. You might think all you need to do is train your next manager with the systems you need. If that’s your thought, you’ll be wrong. You need to find a way to have your next generation develop the mindset of an owner. Without that, you’ll be trying to make someone with an employee mindset change quickly, and that almost never works.
3. Business valuation and funding. Your next owners will want to know how much you’ll charge them for the business. You’ll also need to evaluate if they can afford to pay what you want. The last thing you need is to take back the business once you transfer it. If the price isn’t fair for both parties, there’s a chance you’ll have to take it back…ugh.

I want to start grooming my successor/s.

The earlier you start doing this, the better your result will be. If you’re selling to an outsider, this is not important. If you’re selling to a manager or children, this is key. I recommend you start this process at least three years in advance.

You might find you’re not the best person to train your next owner. This can be especially true if your successor is one of your children. You might find an outside coach or mentor would be better to help get your next generation ready.

Realize that while learning the skills to take over the business, your next in line will make mistakes. Mistakes are part of the learning process. When they do make a mistake (and they will), you want to ask, “what did you learn?” 

If there’s a way to find a peer group they can work with, I highly recommend this. The more your successor hears stories from outsiders who have been through the process, the more likely you’ll have success in training the next generation.

Let’s see what our friend John Aardvark might do.

John Aardvark has decided his daughter, Alicia, is next in line to run his business. She wants to do the job, and she knows there are lots to learn.

The challenge is she doesn’t take constructive comments from her father, John well. He has a habit of being overly critical when she makes a mistake. They’ve tried having Alicia work directly for John, and that never works. John even tried to get his coach Aaron to work with his daughter, and that didn’t work well either.

It wasn’t until John allowed Alicia to find her own team that she started making progress towards developing an owners mindset. Once Alica had made progress towards thinking like an owner and not a manager, John could have frank conversations with her. 

Too often, there is too much baggage from when our children were growing up for us to be effective managers of their work. This was the case with John and Alicia.

What will you do to start?

If you’re over fifty years old and have been in business for more than twenty years, this is a question you need to answer. 

I want you to start here. Think about who is the next logical owner for your company. If it’s a competitor, you’ll do one thing. If it’s one of your children, it will be something completely different.

Having a conversation with me about this one question can help you start down a path that will provide less pain than making a wrong choice. Just click on this link, and we’ll spend twenty minutes together. I can promise that you’ll have a good sense of who the next owner of your company will be for you to have more of your outcomes met.

Well, you’ve now spent a perfectly good six minutes reading this. Why don’t you hit return and let me know what you think about creating the next owner for your company? And, while you’re at it, tell me the way you would like to leave your business?