As an entrepreneur, you’re often so busy dealing with the here and now that you may fail to look forward and make plans for your business after you leave it. If you plan to anoint a successor, without a strategy in place for a successful transition, you may unwittingly sabotage your business, your clients, and your family’s future.
How can you work toward a successful transition? I recommend adhering to the following ABCs:
- Acknowledge your pivotal role in the succession process. Given that your business is likely your biggest asset and a huge part of how you define yourself, it can be overwhelming to think about your “afterlife.” The worst thing you can do, however, is be ambivalent or vague about how you’re going to let go. Beginning to identify other interests is critical to overcoming what I call “transition terrors.”
- Be willing to embrace change. Change is always challenging, even in small doses, and exiting your business definitely represents a huge change. It’s important to accept the necessity of moving in a new direction, shift your thinking about yourself in relation to your business, and have a clear vision of the end of the process. Envision your positive future to help reduce the anxiety about change and prepare yourself for a new life.
- Commit to a plan. With your emotions on board, you need to memorialize the aspects of your business that make it unique. It’s important to have repeatable practices in place that eventually won’t require your presence, since the more essential you are to the business, i.e., everything is in your head, the less value it will have. Make sure your strategy includes both the financial and non-financial aspects that will play a role in the success of your plan.
Business transitions have a huge human element to them, so you need to consider how your actions are going to affect your team members as well as your clients. Think about the following fundamental human elements that need to be addressed in your succession plan:
- Agile entrepreneur. As noted above, you must be willing to modify your thinking in a fresh, powerful direction and embrace new behaviors. Let go of the past and explore possible alternative approaches, including embracing a new model.
- Committed team members. Motivating and retaining key employees is critical to creating and preserving business value. Provide top employees with emotional and financial incentives to stay after your departure to ensure clients’ needs are met and your successor has adequate support.
- Stellar successor. By far the most important part of the process is to identify, assess and retain a key successor candidate who’s a good fit to the culture of your business. Assess the values, personal characteristics, and strengths of both internal and external candidates, using formal assessment tools as you deem necessary. Once you’ve made a choice, help ensure that person’s success by formalizing deadlines, parameters and expectations.
- Client advocates. Because the value of your business is directly related to its sustainability, it’s important to introduce top clients to your successor early in the process. You want clients to feel confident about how the business will operate after you’ve left.
Succession planning isn’t easy, but the long-term viability of your business depends on your ability to plan for its future, ensuring the right people and processes are in place to support ongoing success.