“I can’t see myself retiring. My work is my life. I plan to keep working till I die. I want to go out with my boots on.”
I’ve heard variations on these statements from many entrepreneurs I’ve worked with over the years and I’d have to confess to uttering them myself. The thought of retiring is somewhat frightening for many and for those of us who do really enjoy our work, we can’t see any good reason for retiring. So as we talk about succession planning, we’ll look at it not from the perspective of retiring – though that will be one of the options – but from the perspective of making sure that the business you’ve built takes on a life of its own and can continue with or without you. We’ll look at it through the lens of creating options and choices.
This is a huge topic. When we consider the implications of setting up your business to run whether you are there every day or not, we have to take a range of factors into account. Many of these are the foundation of building a great, sustainable business regardless of how close you are to choosing a successor. These include but are not limited to:
- Departmental Planning
- Performance Planning
- People Development
- Getting the right people in the right roles
- Gathering business intelligence
- Getting everyone working together as a team
- Setting up your business to provide a good income for you now and a secure income for you in the future
- Getting sales and profitability on a consistent, upward incline.
In other words, good succession planning starts with good strategic planning and developing a strong business. Other considerations are more specific:
- Choosing your successor and determining what skills he/she needs.
- Dealing with other would-be successors.
- Family matters – next generation successors.
- Tax matters – setting up a plan to minimize the impact of taxation.
- Estate matters – creating a legacy for yourself and future generations.
- Personal matters – what do you really want to do?
- Emotional matters – how do you deal with the trauma and grief of this change, which some consider the biggest change in their life?
- Getting the best price for your business and exploring the owner options that you retain.
- Selling what the buyer wants to buy. Sometimes the buyer only wants part of your business. Is your business more valuable if you split it up?
- Timing – selling at the peak.
- Keeping your options open – running your business from the cottage.
As we go forward, the goal of our process is to provide a step-by-step approach to dealing with these issues in a manageable way over a defined period of time, rather than having to react to an unexpected purchase offer or suddenly getting so frustrated that you sell without taking the time to do it right. I’ve been talking with entrepreneurs who have sold their business and their stories are fascinating and insightful. It is interesting that most of those I’ve interviewed have either continued to work for the company that bought their business or have started another business.
I met with one fellow who hadn’t followed that pattern. He was retired and very happy to be free of his business. It was a small company in the northern US and he had 850 customers. J. had purchased the family business- started in 1897 from his father 35 years earlier. He did everything from fixing lines, customer service and accounts receivable. He was always on call for power outages or problems and all his customers had his pager number in case of emergency. “Some people’s definition of an emergency and mine were often vastly different,” he told me. He sold his business to a larger utility company and stayed on for a year to help them make the transition. He said he knew he was really finished with the business on the day that he went outside with his gun. His wife heard a couple shots in the back yard and he returned carrying a mangled handful of black plastic and wires. “What’s that?” she asked. “It’s my pager,” he said. “I just shot it.”