Having worked with hundreds of business owners for over 30 years and being one myself, I recognize the signs that tell owners that it’s time to begin planning a business transition. Please note that these signals don’t indicate that it’s time to transition out of your company. Rather, they are signs that it’s time to begin planning your transition journey. There are several signs, of course, and in this article, we’ll look at the most common three ways owners know it’s time to start planning a business transition.
1. A slight shift in your feelings
2. A desire to do something different
3. A potential successor who feels (or is) ready to take the reins
1. A shift in your feelings
The theory of fluid and crystallized intelligence was introduced in the 1940s and distinguished the ability to use reason to solve new problems from the ability to draw upon a stock of knowledge. Fluid intelligence (the former) tends to decrease as we age while crystallized intelligence increases during our 40s, 50s, and 60s and doesn’t decrease for years after.
Owners typically don’t use the words “fluid and crystallized intelligence” to describe the shift they sense in themselves; rather, they say things like, “I enjoy running my company, but not as much as I used to,” or “I used to love going out to meet potential customers, but I don’t get the same charge out of it that I once did.”
Sound familiar? Are you as happy and engaged with your company as you once were? Is your level of engagement spurring or slowing the growth of your company? Would your company benefit from a leader who draws on fluid intelligence and huge reserves of energy to solve problems in a fast-changing world?
2. You want to do something else.
Another expression that few owners use is “a choice of time,” and that can be exactly what they want when they see friends taking two-week biking trips in Croatia, volunteering in Indonesia, building models of Frank Lloyd Wright houses with grandchildren, or mentoring budding entrepreneurs in Costa Rica.
Are you becoming aware of activities that you know you’d enjoy and have the financial wherewithal to pursue? Are you too involved in your company to make them happen?
3. Your potential successor is ready.
The shifts in your level of engagement with your business and how you want to spend your time are subtle and internal. The price you pay for missing these signals is spending more time in your business than you might like. Miss the signal that a potential successor feels (or is) ready to lead your business and you will likely have to delay the launch into your Next Adventure for years.
The Unintended Seeds of Successor Frustration
I’ve yet to meet an owner who has intentionally discouraged a potential successor. Instead, owners tend to talk about the future without realizing how these conversations affect their successors.
Consider this analogy to owners’ conversations about a future transition: L et’s say that you and I work together every day. Two, three, or even four years ago, I asked you if you’d like to come to my home for dinner, and you happily said yes. In the years that have passed since my invitation, I may have asked you a few more times, but I’ve never set a date. Are you beginning to wonder if you are ever coming to dinner at my house? Are you growing frustrated and asking yourself why I ever issued the invitation if I had no intention of following through?
This is the situation too many prospective successors find themselves in. They are the obvious successor. You know it, and more importantly, they know it. When you don’t make a move to even begin planning your transition out of your role and also ownership (and theirs in), can you blame them for becoming increasingly frustrated and even leaving?
If that happens, is there anyone else in your company nearly as entrepreneurial and qualified to succeed you? If not, you’ve postponed your Next Adventure by the number of years it will take to find and mentor another successor.
There is no downside to beginning to plan the transition of your business and your Next Adventure™. Owners, successors, and companies benefit from thoughtful transition strategies that are based on an owner’s goals, maintain an owner’s important relationships, and are flexible enough to change when circumstances do.
We call these transition plans Transition Roadmaps and 100 percent of the owners who have created and used them are living meaningful Next Adventures and have left behind successful companies in the hands of successors prepared to lead. If you’d like to know more, reach out at email@example.com.
Elizabeth Ledoux is a co-author of the award-winning It’s A Journey: The MUST-HAVE Roadmap to Successful Succession Planning, as well as Accelerate Your Entrepreneurial Flight and Understanding the Growth of the Entrepreneur. She frequently speaks to organizations and business owners about challenges and opportunities in private and family business transitions, business and individual growth, and the business succession journey.