As I go about the closely held business market working with clients and meeting prospects, Successor Preparation and Development and Exit Strategy are very active subjects. The states of mind I encounter in these business owners range from peace and excitement of their impending succession to turmoil and anxiety. Those at peace tend to have a diversity of interests beyond the business and are excited about what they will be doing when they transfer leadership and management responsibility. They are also excited about what their successors will do when they get their time at the plate as they’ve spent quality time and effort training and mentoring them. These owners are proud of their achievements with respect to making the business not dependent upon them. They neither profess perfection nor expect perfection recognizing that their successors will make mistakes and learn from them just as they once did. Most of these at peace owners believe that their successors need to hit only about as well as Hall of Famer, Ted Williams (.402), to take the business to even higher levels of success.
Reciprocally, those dealing with turmoil and anxiety have spent so much time working in their business that they have not spent any time working on their business. Their life, passion and purpose in life is their business. They generally have few, if any, compliments of their successors and are very critical of those around them. They are also disappointed that no one has stepped up, given up their families, and given up their hobbies to assume more responsibility. These disgruntled owners believe, whether explicitly or just deep down in their hearts, that the business depends upon them and that if they were not available, success would slip away into a malaise of bad habits and poor discipline. Moreover, they are worriers expressing a high sense of doubt and concern (insecurity) about everything from politics and the economy to the viability of their business and the sensibility of customers. Consequently, this puts a huge roadblock in an owner’s path to succession as they think there is no one trustworthy enough to assume their leadership position.
My response to those who are exit-strategy-averse is to snap out of it and straighten out their thinking! The value of a business depends upon the owner having confidence that the business can survive without them. Who would even attempt to be the successor of a business that was doomed to fail as soon as the resident genius no longer comes to work? Who would spend hard earned money to buy a business that was similarly doomed to failure? The value of a business is no greater than its chance for continued success beyond the current owner/leader.
There is no excuse for not having a successor candidate when others, such as your employees, family members, vendors, etc., are depending upon the continued success of the business. The greatest criticism of a successful business leader is that they did not assume the responsibility of preparing a successor. If you don’t have a successor candidate in the building, go get one before the business value you have dedicated your life to developing evaporates before your eyes. Recruit for heaven’s sake!
Finally, beyond the requisite talent and commitment, the key to building trustworthy successors is trust. Someone took a chance on every trustworthy leader by expressing confidence that they could fulfill expectations. Succession is not a gimme! In the absence of a willingness to take risk, trust, and acknowledge that success is based upon the failure you learn from, there can be no trustworthiness; there can be no succession; and there can be no reasonable expectation to harvest business value.
Sign up for our monthly e-newsletter to stay informed on how to overcome related succession planning issues.
