Helping your family business transition to the next phase (or, to use a familiar phrase, preparing for your succession) is a long process. Transition planning can be a process that is too intensive to contemplate, and so the easiest solution is simply to keep doing what you have been doing, and hope it all works out well in the end.
We’ve all heard the definition of doing the same thing over and over and hoping for different results; and of course it applies to transition planning, as well.
One of the challenges for small family businesses is that the wording used for “transition” or “succession” can be fairly complex and lofty-sounding. Things like “identify critical positions” and “prepare clear performance expectation profiling” seem intended only to confuse, not assist.
At Henry H Jones, CPA, we like to use normal, everyday, business-owner language. So here are our suggested first steps for your own “transition planning” – or to put it even more simply, here’s what we recommend you do if you’re going to step out of the business anytime in the next sixty years. (And unless you’re a teenager, we can pretty much give that stepping out an iron-clad guarantee.)
Transition Planning Step 1: Build profitability now.
No matter when you will step away – or even step back – the more profitable your business, the better prepared you will be for any type of transition. You may want to sell the business, give it to a family member, continue working on a part-time basis, merge with another business, or something else. Any which way you slice it, a better-funded, better-run business will make everything easier.
If you’re considering where and how to improve profits, start with our short Profit Improvement Review. It’s just a few online questions, and we might be able to identify some easy new roads for you.
Transition Planning Step 2: Identify the ‘next generation’.
If you know exactly who you wish to take on the business, identify them clearly and begin grooming them now. If you don’t know – or if it seems like an impossibility to find that perfect person you’d like to have run your business (ie, another, younger, and very obedient You) – then you’ll want to list out characteristics and start the search. Put the list on your website. Share it on social media. Tell people you know and trust that you’re looking for a new manager (or whatever title you want to give it). But keep your keen eyes out for whether that new “manager” can become the new CEO.
Transition Planning Step 3: Begin delegating like mad.
This is something most business owners are terrible at. Let’s just be honest about it. We don’t delegate because:
1) we could do it better ourselves
2) we’ve been let down in the past
3) it takes too much time to explain what we know in our heads
4) the business is ‘our baby’ and we don’t want anyone else touching it, really.
Whether it’s one or all four of these factors, you have to begin to let them go. Yes, you could do it better yourself….to a point. But the more work you have to do, the more you must admit that you’re actually not doing it better yourself; you’re doing it 80% as well because you’re tired and overworked. The key to delegation is to be completely happy with the work being done 80% as well as you would do it, and train them on the remaining 20%.
Delegate anything and everything in your business. Every single time an email or a phone call or a “to do” item comes in, stop and think. Do you, personally, absolutely have to deal with this? Or is there someone who can do it just as well, or whom you could train to do it? Remember that training does not have to be a 40-week process, complete with graphs and charts and personality profiles. Record a 3-minute video on your smartphone and email it to one of your team. Job done.
There are more steps to the transition process, but these are the first three you can begin with.
More on this to come!