Running your company, calling the shots and making things happen has been your life and you have been very good at it. You are and should be very proud of what you have accomplished, but now it is time to step back, to step away, and determine what the next generation of your company looks like. In the following series, I outline many issues business owners face when ready to transition, how to help navigate a business in transition, and some final takeaways.
Letting go and watching your business run without you involved day to day invokes terror in most business owners. However, when this is done well you have the satisfaction of seeing the business continue to thrive and grow. Unfortunately, around 60% of all privately-owned businesses do not successfully transition to 2nd generation ownership.
What follows is a story of a fictional business owner and his transition journey. I am sure many business owners can relate to this story. My hope is that it helps you reflect and consider what you must do.
Why do so few businesses succeed in transitioning successfully?
No Transition Plan:
I have been a successful small business owner for more than 30 years. No one can run my business as well as I and as I think about the future, I feel like I have plenty of time to think about a transition plan. I know there is a risk that as I continue to age, health issues could start to appear. As that happens my desire to do the hard work necessary to develop and execute a well thought out transition plan may wane. I also have read that more than 40% of business owners do not have a plan to step away from the business. But I have plenty of time and will develop a business transition later when I am ready.
The Business is their Life:
Recently, I had a wakeup call. I had been having discussions with a fellow business owner about when we should consider developing and executing a business transition plan. We both agreed we had plenty of time. He said, “My business is my life” and when I talked to him, he was feeling really good. He loved what he was doing and was not ready to give it up. He figured there was plenty of time to think about this later. “Besides”, he said, “I have to make sure that this product gets out this week so we can meet our sales numbers for the month. My biggest customer needs me to come and see them. One of my best employees quit and went to a competitor and now I have to hire a replacement. Even if I wanted to, I don’t have time to think about a transition plan and no one can do this as well as I can. If I sell the business or transition to another leader, what will I do? I am still capable to run this business and no one can run it as well as I. Yes, I am getting older but I still have a lot of years left.”
Catastrophic Event Happens:
Then, he had a heart attack and didn’t make it. His family is now left with needing to make immediate decisions regarding the business. He is no longer here and cannot give input in decisions that need to be made. He lost the opportunity to think through the future. He has left his family and his employees in a very difficult position and they are at the mercy of others who may or may not have their best interests at heart. They certainly do not have the knowledge, blood, sweat, and tears he had in the business. If only he would have listened. He could have developed and executed a solid plan to protect the business, his family, and the people who work there.
To find out what you can do to help ease a leadership transition, continue to Part Two. Go to Part Three.
