Creating a Business Transition Plan in a Volatile World?

We frequently meet business owners who are hesitant to make a plan to transition their businesses to successors—often their adult children—during today’s volatile times. If volatility has put your transition on pause, we’d like to help change your mindset by focusing on just two words: volatility and plan.

Volatility

According to Merriam-Webster, the word volatile means: characterized by or subject to rapid or unexpected change. We see the word used a lot lately to describe the financial markets, wars in the Middle East and Ukraine, and national politics, to name just a few examples.

Everyone defines volatility differently, of course. To some, only emergencies and crises qualify as volatility, yet we’ve found volatility to be a constant in our lives, even if we don’t usually acknowledge it. For example, if we say, “We’ll be at your house today at 4:00,” we assume that this will happen even though we don’t know if the car will start, has gas or a flat tire, or that the street where you live will be impassable due to a water main break. If we stopped to acknowledge the almost-infinite number of reasons we might not get where we wanted to go, we’d likely never leave the garage! It’s far more comfortable to believe all will be well, and we’ll fulfill our promises.

But what does this have to do with creating a business transition plan in a volatile world? Bear with us for just a moment as we look at the opposite of volatility: stability.

Stability is so comfortable.

In The Comfort Crisis: Embrace Discomfort To Reclaim Your Wild, Happy, Healthy Self, author Michael Easter describes his findings that it’s not comfort that improves our health, creativity, and happiness. Rather, it’s discomfort! Our true potential lies in discomfort, yet we prefer stability, and most of us are not at all comfortable with the discomfort that comes from volatility.

Business volatility

Business is volatile, and owners deal with it constantly. Employees give notice, clients declare bankruptcy, a larger competitor releases a similar product, databases are breached, a piece of expensive machinery just can’t be repaired, the interest rate on a line of credit skyrockets. Most owners do their best to put plans in place to respond to unforeseen events yet are fully aware that it’s impossible to plan for everything and anything.

Volatility in Business Transitions

The same is true in business transitions: it’s impossible to plan for everything and anything that could occur between today and the day you transition all your equity to a successor and begin the next phase of your life. What is possible is to create a goals-based transition roadmap that, by pointing you in the direction you want to go, equips you to nimbly adapt and stay on track when things don’t go as hoped or anticipated.

Volatility in business doesn’t pause once a transition process begins. In addition to all the “everyday” sources of business volatility, some sources are specific to the transition process. For example, it may take longer than anticipated to prepare a successor to lead or grow a company to a point where its cash flow can support a transition. Spouses, other family members, and even employees may voice, and act upon, their strong objections to your choice of a successor. The business environment may shift significantly in a positive or negative direction which accelerates or prolongs your ability to transition when you choose.

And yet, even though you can’t prepare for every possible source of volatility during a transition, you can maximize your odds of reaching your transition destination by creating a transition roadmap.

It’s a Transition Roadmap™, not a transition plan.

We will grant you that “transition plan” sounds more confident than “Transition Roadmap.” You can tell others “We’ve made a plan, and we’re sticking to it!” or “Plan your work and work your plan.” By contrast, “I’ve got roadmap!” and “Map your work and work your map” just don’t have the same oomph.

The problem with a plan.

Beyond oomph, however, the fatal flaw of a plan is that no plan can remain current in a volatile world, much less throughout the transition of a business. A business transition roadmap, on the other hand, suggests a journey during which you can learn along the way and adjust based on new knowledge and experiences.

A transition roadmap is a strategy that remains relevant and useful because it:

Is built on an owner’s goals related to six issues (ones we call The Big Six™) that create a compass owners can use to keep moving in the direction they desire.
Eliminates some courses of action from consideration when a transition inevitably encounters obstacles. At the same time as owners identify their goals, they also identify issues that are critically important to them (ones we call Deal Breakers™). For example, an owner might decide that her relationship with her family is so important that she won’t pursue an option that will jeopardize that. When that owner encounters obstacles that require her to adjust course, she need not spend time or energy considering any adjustment that would violate her Deal Breaker.
Embraces—and even expects—volatility, so when it happens, owners can pivot and move forward.
Enables owners to communicate their wishes clearly. Creating a roadmap involves setting milestones that mark what needs to be done so, if volatility takes the form of an owner’s disability, for example, others know what to do to keep the transition process moving.

In addition, many owners think of plans as static, unchangeable. Therefore, if they must modify them, these owners typically consider their plans to be a failure. Changing their mindset from plan to roadmap makes a huge difference in how owners approach their business transitions.