Successful transitions need a plan
We regularly talk with private business owners that are either considering or are in the process of transitioning their company leadership to a son, daughter or even a third party recruited CEO. In our work, we see the transitions that are going seamlessly and protecting, even building the value or net worth of the company. And we see those that are eroding it. Let us share with you some key thoughts and steps to have in mind to increase the success of your transition.
First is conducting an honest assessment by the retiring owner as to their true willingness to hand over the reins. This includes self-reflecting on questions like these:
- Do I really want to step aside or am I getting pressure from others?
- Am I truly willing to handle over all aspects of the business or do I want to retain certain aspects?
- Can I place full trust in the new leader of my business? If not, then is it the right person or right time?
- Is my business at a place I believe no longer needs me personally and I’m prepared to let a new leader leave their imprint on the company?
- Is the financial condition of my company where I want it to be so that I don’t need to worry about it supporting my financial needs in retirement?
- Can I separate my personal identify from that of the business or are they one in the same? Do I view the business as simply a means to another end or is my business everything in my life?
- Am I ready to start spending time elsewhere beyond my business so I truly allow someone else to take it over without my involvement?
Next is ensuring alignment with the son, daughter or third-party CEO in terms of expectations you might have. Open dialog to drive alignment around things like:
- Have you discussed longer term deliverables you are looking for, even the vision of the business?
- Have you identified what communications and information you want to receive periodically from the new leader of your business? Do you want to receive weekly updates, monthly, etc and what specific types of information will you want to receive from them?
- Have you gotten aligned around what strategic/financial decisions you are empowering them to make on their own? Are you giving them full authority and decision making or are their limits you will place on them?
- If you aren’t going to remain involved, are you providing them with mentoring from a board or an advisor, so they have support to be as successful as possible in their new role?
These types of leadership transitions generally don’t happen naturally on their own. They need quality dialog and effective planning. If you’re an owner thinking about transitioning leadership to another, just know that others have gone down this path before you and there is much to learn from those that have done it successfully. Give us a call and we can help ensure that the transition of leadership continues to build the worth of your company that you have established.
