Every smart move you make in business requires a clear view of the road ahead. That’s especially true whether you’re considering handing off your family business to the next generation or making a good, solid exit from the business you have built.
You can take some crucial steps today that will make sure you reach your desired destination.
Take Time Out to See the Long View
As hard as it may feel, begin by taking time out of the day-to-day running of the business. This may seem counterintuitive but preparing for a transition will be difficult to execute without a strategic break from everyday operations. During this time-out, there are two smart moves you can make to get clear on the road ahead.
Develop your 10-year BHAG (“Big Hairy Audacious Goal”). This phrase coined by Jim Collins, author of Good to Great, captures the significance of an objective you would like to see your business achieve within the next ten years.
Yes, I said 10 years. Even if you don’t plan on being around then!
Your BHAG will serve as your North Star, a reference point in the future by which you can steer the corporate ship prudently into longer-term decisions and plans. With that goal in sight, you will be better able to stay on course, building a strong organization that others will be excited to take over after you.
Make a strong succession plan. If you have one in place, now is the time to update it, informed by your present financials, the industry landscape, and current personnel. If you don’t have a succession plan, don’t put it off any longer. Your approaching handoff or exit demands one. Why? For these reasons and more:
- Succession planning prevents a panicked scramble for direction when a leadership transition occurs.
- It allows time to ensure future successors align with the company culture and will maintain that positive environment when they take the reins.
- Under a well-implemented succession plan, employee morale and motivation stay elevated, as people know there are clear paths to advancement.
- The process of succession planning keeps the functions of key roles and the status of talent development front-of-mind for your leaders. During changes, they will be agile and resilient.
By stepping back from the daily running of the business to set a long-term goal and beef up your succession plan, you improve your perspective on where you are now, how you got here, and—most importantly—where you are going.
Assess Your Readiness to Execute Your Plan
With the destination—the BHAG—in view, making the next smart moves will help you survey your organization’s landscape and map a route to achieving that outcome.
First, scrutinize your current financial standing. To do this, you’ll need to gather quality data on revenue, profitability, and the up-to-date value of your assets. You will also need to create a 36-month cash flow projection to anticipate future capital needs of the business. Further, because the lines may have blurred over time, carefully separate out family or personal expenses from those of the business.
Second, evaluate the preparedness of your leaders. To see the business through upcoming changes, a senior team packed with A-Players is vital. These are people who personally embody your company culture and values; they work for the good of that company and not just for their own interests. They take responsibility for their own outcomes and are known for delivering on their promises. (For more on A-Players, read my post here.)
Do you detect weaknesses in your current team? This would be a good time to implement and incentivize leadership development. Provide training, education, and mentoring that equips your weaker leaders to level up to A-Player quality. Additionally, you can recruit and train a new generation of leaders to strengthen your bench for future wins.
Third, establish a disaster recovery or contingency plan. Bad things happen to good people every day and you never know when one of your key employees is going to leave by choice or through an accident, illness, or even death. Therefore, you should have a disaster recovery plan that includes steps to take when a senior team member leaves at short notice. This could include lining up key person insurance to bridge the gap and provide funds for hiring either a full-time or interim replacement. (If you have such insurance, check that the names of those covered and the level of coverage are up to date.)
Your plan should address more than just quickly filling roles vacated by senior people. Include contingency responses for these areas as well:
- Finances: How and where would your company raise money quickly?
- IT: Who can you call upon to help handle internet, communications, software, or data issues?
- Key assets: How would you handle disasters involving assets such as your real property or specialized equipment?
With an accurate grasp of your finances, your leadership development, and reliable strategies to see you through a worst-case scenario, you can calmly take measures to keep these areas growing steadily stronger even as you prepare for departure.
This brings us to one more smart move you can make—this time, for your personal benefit.
Fourth, prepare yourself. Giving thought to what you will do after leaving your current role is also an important part of succession planning. I have seen many business owners and leaders skip this step. Once they sell the business or hand it off to the next generation, they feel completely lost.
This happened to my father. After spending 40-plus years working for the family business, retirement made him feel he had lost his purpose and identity. Fortunately we eventually found him a role that met his post-retirement needs.
Don’t let this happen to you. Establish new goals for yourself before the reins leave your hands.
The Close-Up View: The Advisors Who Surround You
By making the moves described above, you will have charted a course toward your destination and evaluated the present lay of the land. You will have prepared the path that will get you where you want to go.
Now, here’s your final smart move—the one that will position your feet to step off confidently along that road to a successful transition.
Surround yourself with A-Player advisors. Just as competitive athletes gather a team of top-quality coaches, you should assemble a group of A-Players to serve as your CPA, lawyer, financial advisor, and business coach. When you’re preparing your business for a handoff or an exit, it pays to have professionals supporting you in the key areas impacted by transition.
For some business owners, especially founders who have spent a significant part of their life building up a successful enterprise, selling their business or handing it over to the next generation of leaders may be unthinkable. However, one thing is certain: at some point you will exit the business. The question is, will you leave behind a well-thought-out and documented plan to ensure the continued success of the organization? Or will it be like a scavenger hunt, with your frantic successors scurrying to figure things out by themselves?
My own family business journey taught me the worth of having an experienced coach by my side when facing important challenges and changes. Without him, I am not sure I would have been able to grow and eventually sell the business.
If you’re curious about bringing a skilled business coach onto your team or want help to reach your goals faster, then let’s have a chat to find out if coaching is a fit for you. Reach out here to set up a completely free and confidential consultation.
Related Topics:
Succession Planning: How to Set Your Business Up for Long-Term Success
The 7 Fundamentals of Business Turnaround: Strategies for Success
5 Signs You Excel at Strategizing for Strong Business Growth
