I’ve written before about why it’s never too early to start business succession planning. Yet, even when owners recognize the benefits of planning for the transition of their companies well in advance of any transfer, some continue to put it off. Why? In my work with business owners, my team and I identified four assumptions that they commonly make about the succession planning process.
1. Expect perfection
When owners begin to get a clear picture of everything that’s involved in a successful business transition, many get stuck. For good reason! If we believed that a transition had to be perfect to be successful or that transition is a one-time event, we’d get stuck too.
When my team and I work with owners to craft transition strategies, we are guided by seven principles, the third of which is: No transition is perfect. No transition can meet all your goals, but if crafted properly, a transition strategy should deliver what is most important to you.
We also know that business transitions are not one-time events. Creating a successful transition for yourself, your successor and your business is a process. Think of it as a journey with milestones to meet, detours to avoid and new situations to navigate.
2. Try to read minds
I have yet to meet an owner who can read minds, but I’ve met my share of those who think they can. Owners who tell us what potential successors, key employees and/or family members are thinking or will do miss the opportunity to correct any misalignment between what they want and what others want. At some point in every transition journey, there is a difference between what owners want and what someone else wants. Owners who test their assumptions by asking questions can identify misalignments and make adjustments that are consistent with their objectives.
3. Guard the secret of succession
Too many owners sabotage their succession plans by failing to communicate. Typically, the lack of communication arises from an owner’s assumption that a successor knows nothing or everything about running the business.
I’m not an advocate of the opposite “tell-all” position. Instead, my team and I work with owners to create confidence by considering the when, who, how and what of effective communication.
- When: Communicate with some people before others.
- Who: Solicit counsel from advisors (and/or spouses).
- How: Present a topic one way when considering it and another once committed to it.
- What: Remember that the prime concern of the listener is what’s in it for them.
4. Try to do it all
There are a lot of moving and complex pieces to a business transition: the preparation of a business to run without its current owner, the education of a successor, a calculation of the assets necessary for owners to live the lives they want after they leave their companies, analysis of tax ramifications of multiple equity transfer methods and setting up proper business governance, to name a few. Just as no one professional advisor is skilled in managing all these pieces, neither can one owner do it all.
The pinnacle of your business life should be the day that your successor confidently leads your company and you embark on your next adventure.
This article originally appeared on The Denver Business Journal website.