What Most Transition Plans Miss (And Why It Matters)
Episode Description:
Most business transition plans focus heavily on financial structure and tax strategy while missing the critical elements that determine whether a transition actually succeeds. In this episode, Elizabeth Ledoux breaks down the five key areas that traditional succession plans overlook and explains why addressing the “people side” of transition is just as important as the numbers. Tap or click the play button below to listen to What Most Transition Plans Miss (And Why It Matters).
Elizabeth shares insights from teaching transition planning to advisors and observing how most plans start with the wrong questions. Instead of beginning with “how much money can I get?” and “how do I structure it?”, successful transitions start with understanding what matters most to everyone involved.
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Key Topics Covered:
The Problem with Traditional Planning: Why starting with financial structure misses critical relationship dynamics
Missing Element #1: Envisioning Your Next Adventure – Understanding what fulfillment looks like beyond business ownership
Missing Element #2: Developing Successors with Intention – Creating structured learning paths with clear milestones
Missing Element #3: Honoring Emotional Journeys – Making space for feelings and fears that come with major change
Missing Element #4: Alignment of Multiple Objectives – Understanding what matters most to everyone affected by the transition
Missing Element #5: Building Governance Structures – Creating decision-making frameworks that support successor development
The TTS Success Story: How a people-first approach led to 100% of client businesses continuing to thrive under new leadership
Elizabeth emphasizes that successful transitions require getting other people excited about joining the journey, not just creating a plan in isolation. She introduces tools like the Objectives Matrix and explains how deep conversations about hopes, fears, and dreams create the foundation for transitions that work for everyone involved.
Chapters in this episode:
00:00 Introduction to What Transition Plans Miss
02:19 The Problem with Starting with “How” and “How Much”
04:45 Missing Element #1: Envisioning Your Next Adventure
07:03 Missing Element #2: Developing Successors with Intention
09:29 Missing Element #3: Honoring Emotional Journeys
13:55 Missing Element #4: Alignment of Multiple Objectives
20:55 Missing Element #5: Building Governance Structures
25:41 Taking Action and Using Time to Your Advantage
Connect with Elizabeth Ledoux and the Transition Strategists:
What Most Transition Plans Miss (And Why It Matters) Transcript
Elizabeth Ledoux:
Welcome back and it’s fun to be back at the Business Transition Roadmap. Podcast today is a podcast that is going to be focused on what most transition plans miss and why it matters also. So when I wrote the book called It’s a Journey, and it’s been quite a few years ago now—probably close to five or so—when that book got written, we really focused on the emotional side of it and the human side of it. So one of the themes in that book is a people-first concept.
And the reason why we did that was because in my experience over the years, I actually taught a boot camp for a company that was teaching advisors how to do transition roadmaps. They called them exit plans at the time. Which, one, I’m not a big fan of a plan because plans change. I don’t know why, just that word doesn’t fit with me. And then the word “exit.” At some point, yes, at some point you’re going to exit. You’re probably going to have a lot of exits. You’re going to exit taking care of certain tasks and maybe exit a role, and maybe someday you’ll exit part of your equity, and then you’re probably going to exit the rest of it at some point in time.
So you’re going to have so many exits that thinking of it in a journey format I think is much more realistic than thinking of it as an exit. It also gives you some time to figure things out and it’s not quite as frightening. We found that a lot more people like to engage in the idea of doing a roadmap—something that they can move through.
Back many years ago, when I was teaching that boot camp and the advisors were all learning about how to do exit planning, what I found is people were starting with the how and the how much. Thinking about, “Gosh, how much money could I get out of this business or for this business? And will it be enough?” That was another question. And then, “How do I do it? What’s the structure? What’s the strategy? What’s the estate plan? Am I putting it into a trust?” Once I get the money, who’s going to manage it? Is it going into public equities or private equities?
And those are all important without any question. But most transition plans that are done still today—what I think they’re missing the most—is the people side of it. Because they’re so focused on this idea of the functional side. The people side also includes you. So if you’re the owner and you’re the one who’s going to be the transitioner, we’ll start with the first one. I think that knowing your next adventure and actually envisioning it is one thing that most transition plans miss—trying to figure out what’s next for you.
I just literally got off of a meeting, probably 30 minutes ago, with a wonderful man. He’s transitioned three different companies over the last years. And what’s next? So he successfully has done that. He successfully built them and transitioned them. Still, after three businesses, doesn’t know what’s next. And because of that, what happens is entrepreneurs tend to get out of their business, they get unhappy, and they don’t really have that next adventure in mind. So what they’ll do is start another business. And they start it many, many times from scratch. Sometimes they’ll go buy one, but many times they’ll start it from scratch. And we all know—if you’re an entrepreneur and have done that—we all know how hard that is to do. There’s a lot of work in that.
So, why does it matter? If you’re focused solely on this transition and you’re not seeing what you’re moving towards, likely you have the opportunity of leaving and being unhappy. If it is a family transition, you have the high likelihood of thinking you’re leaving—and also hanging on. Why? Because you don’t have anything else to move towards.
In order for human beings to be happy, we want to be fulfilled. And in order to be fulfilled, we need to have something that’s fun for us to do, something that makes us happy. So one thing that most transition plans miss: it’s envisioning your next adventure and taking some time to do that.
Thinking about putting people first, right? In that same theme and that same line. Developing your successor with intention. A successor has one of the highest learning curves of anybody going through this transition. You, if you’re the transitioner, yeah, you have to go figure out your next adventure. But many people will think that’s pretty luxurious—that you’re going to have time on your hands, and hopefully you’re going to have enough money to do some fun things. So you’ll end up like, “Hey, what’s your problem? You have time and you have some money, so you should be happy.” That may or may not be true.
When you think about developing your successor, they’re coming into your role. You’ve been in that role and you understand—even with all of your knowledge and wisdom and years of experience—you still know how challenging it is to be in that role. So, when you think of developing your successor with intention, that is something that transition plans tend to miss. How is this person going to get the knowledge and the skills and the experience and the intuition and all of the things that they need to successfully take this business forward?
Things to consider as you develop what we call a transition roadmap: you can start from today and you can develop people and figure out your next adventure—but also develop your successor with intention. In that plan, in that strategy, you can have clear milestones. Clear milestones that a successor can commit to achieving, and you can commit to both teaching and training and mentoring, but also letting go. So those important conversations can happen, and they can be part of the transition strategy.
The other thing that transition plans sometimes miss is just honoring emotional journeys. I’m probably laughing inside and kind of smiling because the emotional journey is big—for everybody. Being able to honor that is something that a lot of plans don’t do. They’re back to the function: the taxes, the structure, the legal documents, who can and can’t be a partner or a shareholder. It’s back to all the function, the money, and again, how you’re going to invest it, etc.
Honoring the emotional journey is tough—especially if you’re the leader. If you’re the leader and you’re the transitioner, many times you’re kind of tired. Because doing this transition journey is on top of your normal job, unless you’ve already started to work your way out. If your successor’s already come in and taken over some of your things, great. But most of the time, you’re doing this transition on top of your regular job, which can be amazingly challenging. Most entrepreneurs don’t have a part-time job—most of them have full-time or full-time-plus jobs.
When you think about the emotional journey that you’re going through, don’t forget about everybody else’s. The successor, if you put yourself in their shoes—what are they feeling? They could be feeling unsure. They could be feeling inadequate. They could be feeling like it’s challenging to earn respect from others because you already have that respect. Your spouse—that’s an emotional journey for them too. You being around more causes a shift in their lives as well.
Are they excited about that shift? Will there be some bumps in the road? Yes. And as those happen, how do you make room for that? How do you honor that emotional journey? So you want to make space for those conversations. Also, invite people to come and talk to you. If they’re curious—I love the curiosity. We’d rather have curiosity and talk about that than have conclusions that people are running around with. Many, many times those conclusions are not true.
We want to have conversations about hopes and fears and also things people are avoiding. Because it’s great to walk down this road, but we also know people will be avoiding things. Bringing those out in the open is important.
When you’re building out your plan, what most plans miss is alignment. As a transitioner, many times—because you’ve been that leader, the one who has had all the weight on your shoulders—it’s likely, because of learned behavior, that you’ll take the whole planning process on yourself. The other thing that’s very likely is you’ll try to create a strategy with many, if not all, the answers.
But in a transition strategy, you can’t do it by yourself. You have to have other people who actually want to come in—who can’t wait to come in. They want it so badly that in a way, they’re willing to push you out—which is super uncomfortable as the owner. That gets missed: the alignment of the multiple objectives—not just your objectives, but other people’s.
And what’s hard is if you’re focused on the how and the how much—the money, the function, the trust, the taxes—you miss the people objectives. Why? Because they’re hard to figure out. The only way to figure out others’ objectives is by asking them.
You can assume you know what their objectives are. Like, “Yes, they want to own 100%,” or “Our kids will be happy each owning an equal amount.” That’s a parent’s objective, but it might not be the kids’. And they may disagree.
The alignment of multiple objectives—how do you figure out somebody else’s objectives? It’s hard. Over the years, personally, it took us and our company probably about five years to master this thing that we call the Objectives Matrix. It looks super simple and easy to use on the outside, and it is great. It really works.
Sharing that with you because there’s an invitation from us: one, you can come in and we’ll—you know, we have this great new program called Evolve, where you get to do an immersion program. And you get to come in and in three days you build out your strategy. It’s a three-day immersion program, and Evolve—you get to, in it, emerge. The immersion program is a part of Evolve, and then you get some coaching and some other things that go after that to make sure that you’re going to get off the ground really nicely and very well.
But our Objectives Matrix is a part of that. The other place you can find that is in our book. So the book is called It’s a Journey. We want to share these tools with you because we want to encourage you to build out a transition roadmap that not only takes the how and how much into consideration but also gets the people side. That’s what will create a great, successful, strategic transition strategy for you. It’ll make it work.
Alignment of objectives—hard to find. What you need to do: you’ve got to consider and understand what matters most to other people. Those conversations are deep. It’s not like, “Do you want to go for a walk in the park today?” It’s not that. It’s, “How do you want to live the rest of your life? What’s important to you in the rest of your life? What do you want to accomplish? What are your dreams? What do you want for your family? What do you want personally for you? What’s your next adventure? Coming into this business—is this the right place for you?”
These are deep conversations: health, well-being, where they want to live. It’s big. Those multiple objectives—personal objectives and also company/business objectives—create alignment. So that would be another one that many, many plans miss.
So, have you considered what success looks like for you? Very important, because that goes back up to the first one we talked about today, which is envisioning your next adventure. Those are part of your objectives. And it also considers other people’s. You can include as many people as you’d like: spouses, kids, adult children, employees, partners. All those people have objectives, and they all would like to see something in your transition.
Now, you can’t take care of everybody. And in our work, nobody has ever gotten all their objectives. Not everybody gets everything they want. But it certainly is easier to solve a problem when you know what the puzzle pieces are. Sometimes it can be put together so simply just because you know one piece that you might not have thought about if you had gone down and just gone for the how and how much.
Gosh. I guess one of the other ones—and I’ll wrap up with this one. This one can be a part of your strategy or not a part of the initial strategy. Because as an owner, typically in these private businesses, it’s a very small number of people who are in what we would call governance area. Governance is key. And owners—single owners, private owners that don’t have partners involved in the business—they typically are everything. They’re the CEO, they are the chairman of the board, they’re the owner-investor, they make all the decisions. That is their structure.
So people will come in and go, “Well, I don’t have a governance structure.” And I’m like, “Yes, you actually do have a governance structure.” Your governance structure is all tied up into one person—and it’s you. You can hold your board meetings whenever you want and your owner meetings whenever you want because you make all of your own choices. But that is your governance structure.
So when you think of the evolution that a business goes through, sometimes the governance gets missed. Personally, I think this is a big deal because the statistics for businesses going forward well—it’s low. I just heard a recent statistic and it’s like, gosh—they said only 10% of businesses, I think, survive 10 years.
So if your business and you as an owner have been around for more than 10 years, or close to 10 years, and you have a company that somebody would be interested in continuing forward—that’s a big accomplishment. And you’ve had a great governance structure to get as far as you have gotten. What we believe is that business owners tend to leave too soon. And that’s why those businesses fail.
We’ve got a very high rate of success over the years that we’ve been doing this. We’ve been doing this for almost 30 years now—or I have—and the companies that we work with continue forward with the next generation running them. We have such a high, high, high rate that in our research and all of the stats, 100% of the business owners that we’ve worked with—their businesses are still together. They’re still working. And that’s incredible. We’ve broken the record by far—blown it out of the water.
Clear governance—thinking about how decisions will be made in this company, and how they will be made going forward. There’s a huge shift in the thinking here. Because these clear governance structures—when you’re everything, when you’re the job CEO making decisions, you’re the board making decisions, and you’re the owner making decisions, and they’re all blended together—you don’t see that there are decision levels.
In doing the governance structure, one of the first things that we do in this Evolve program is start to talk a little bit about what we call decision levels. Because decision levels—you can set them for your CEO level. You can set decision levels for your chairman of the board level. And you can set decision levels that have to be made at the owner level and the investor level.
By doing that, by having those three levels and seeing which ones go where—and also reflecting on how you’ve done it, because you actually don’t know how you’ve done it all these years—then what you’re able to do is, as you transition over time, it’s like an accelerator and a brake.
You might keep many decisions at the board level and not let the CEO level have big decisions. That might be year one, year two. Then, as they get better, you give them some more, give them some more. The CEO or that C-level team starts to make bigger decisions, and some of the pressure comes off the board for decision-making. Typically, your owners and those investors are just making decisions about big things—like if the company’s being sold and those types of decisions.
Creating clear governance structures is important. It does not have to be in your original strategy, and it is a training ground—a great training ground—for your successor. So, as you develop your successor or successors with intention, using governance and having different structure can be very, very helpful.
It also helps you to honor the emotional journey, because you don’t let go too soon. You have—I’ll call them fewer train wrecks along the way. Because you can have small train wrecks and big ones. But you have fewer little accidents along the way, and you’re able to just create what we would call harmony in the work that you do.
You can create and leave a legacy, and you can also do it with harmony, and help people to honor that emotional journey—which is how they gain confidence, they gain clarity, and they gain the stability to be able to do this big job that you’re asking them to do.
You also can have the emotional awareness of when it’s the right time to let go. So your emotional journey is whole as well.
So when you’re thinking about what most transition plans miss, I’d say a majority of them miss the big people side—including you and your next adventure, including your successor and developing their skills and confidence, helping people with their emotional journey, making sure that you get these objectives aligned—super important. That’s where a lot of the conflict comes from. And if you get it right in the beginning and dive deep, the journey’s better for sure. And then understanding how governance structures can shift to help with this transition strategy—whether you choose to change governance early or navigate into it over time.
I hope this was helpful for you, because building a transition strategy is extremely important. Without one, you’re just going to leave at some point—and it probably will be an event instead of a journey. Much better to make it a journey. It’s a lot more fun, and usually you have a lot greater success. My wish for you: a wonderful transition strategy and a fantastic journey. See you next time.
As you start to think about your transition strategy, really think about it and use time. Use time to help yourself. Time does a lot of good things, and it helps you to hit these items that usually get missed.
The event is the exit of the business asset, right? You’re going to transition that equity. The other work that you’re going to do in preparation for that gives people the time to come together, to align their objectives, to figure out how they’re going to govern this thing, to honor their emotional journey, to develop their successors, and to grow and explore a next adventure.
So as you do that, my wish for you is to be able to embrace this—embrace it early—and use time to your advantage.
If you’re planning to transition in the next two to ten years, our invitation to you is to download this free guide that we put together. It’s called Five Parts of a Succession Plan CPAs and Attorneys Often Miss. It’s kind of a shortcut to a stronger, smoother plan for you. You can take this and work with your CPAs and attorneys so they can include this in their strategy.
Where you get this is at:
transitionstrategists.com/plan That’s transitionstrategists.com/plan—where you can find that.
It’s just a great guide and, again, we’d love for you to use it because our goal for you is to have a successful transition—one where your relationships are whole, you’re on your great next adventure, the governance is working, the business is thriving forward, and people are confident in what they’re doing.
So—good luck, and I will see you next time.
The Business Transition Roadmap with Elizabeth LedouxHow do communities thrive? When businesses experience healthy growth and transition. Join CEO of The Transition Strategists, Elizabeth Ledoux as she and her guests identify what makes a successful business transition roadmap. If you know you want to transition or exit your business “one day”, today is the right day to start planning. This show will give you the roadmap.
If you’ve enjoyed this podcast, you can check out other episodes here: Podcasts – The Transition Strategists
