How to transition yourself out of a business
As the owner of your business, there will come a time when you need to transition yourself out of a business. And the sooner that happens, the better. Your exit strategy – whatever that might look like – depends on it.
Do you want to transition yourself out of your business to sell it? Or are you thinking about passing it on to the next generation and have already identified an heir apparent? Maybe there’s somebody working within your business right now who can take it over from you. Or perhaps you intend to retain a financial interest in your business, but no longer wish to be involved in the day-to-day running of it.
Whatever your intentions are, in all of these instances there is a common denominator that will ensure a seamless transition out of your business. That common denominator is you. And it’s why your business can no longer be all about you!
In short: to let your business go, you’ve got to let go.
So that means you need to put away your ego, make yourself dispensable and become the least important person in your business! And, for a lot of business owners, that can be a challenge. Letting go could be the hardest thing you’ll ever do.
After all, this is your baby. You’re the brains that built this business. It couldn’t possibly function without your brilliance, right? Maybe not right now. But it needs to. Especially if you want some financial return at the end of the game.
Because if you remain the kingpin in your business, and its continued success is dependent on you, then you restrict its appeal to outside investors. For when the time comes for you to exit, if you haven’t already become superfluous, then you’ve left it far too late.
“Hire people who are better than you are, then leave them to get on with it.” David Ogilvy
Delegation is key to the growth and development of every business. If your business is only as good as the hours you can put in, then it has a ceiling. It can only grow so far.
So, the best way to transition yourself out of your business is to find others to do what you do. And, if you’re a smart operator like David Ogilvy, you’ll find people who are even more qualified than you are!
And then once you’ve done that, as Ogilvy says, you leave them to get on with it!
Of course, you can’t just hire someone to replace you and hope they’ll be as good as you from the outset. Grooming a successor will take time. It will also take a degree of humility, especially if that person really is better than you.
A strong candidate will have their own opinions, and they won’t be easily managed or dictated to. So, again, you’ll need to drop the ego and swallow your pride to ensure a smooth transition of power. Have you already identified someone who can take over from you? Are they really the best candidate? This is a mission-critical decision, so not one to take lightly.
It’s also a difficult decision to take when there’s nepotism involved.
Keeping it in the family
You wouldn’t be alone if you’re considering handing over the reins to a son or daughter when you step down. But, in truth, are they really the right person for the job? And do they want those reins in the first place?
Try to take an objective look at the situation and ask yourself whether you would employ your son or daughter if they weren’t family. How would they perform if they weren’t working for mum or dad? Because if they’d flounder outside of the family firm, then they’re not really cut out for the top job after all.
You need to find a superstar. Someone who has the authority, the decision-making skills and the dedication to replace you. Finding that person – or people – won’t be easy, so start looking for them now!
Plan now, don’t react later
There’s a proactive approach to exiting your business. But it’s rare, as it requires considerable planning, preparation and application to get right. It takes hard work and some time to get your business in the perfect position for you to transition out of it, and at the time that suits you best.
Sadly, though, most business sales, and particularly those within the micro enterprise sector (businesses that employ 0-9 people and account for 96% of UK companies), are reactive.
In other words, the sale is a result of something else happening.
That could be ill health, a change in the market or a partnership breaking down. But you aren’t in control of any of that, so you have to react to the circumstances and exit your business when it’s not really in the best state for that to happen.
If that means selling, then you won’t get the best price for your business. If it means putting a successor in place, then they won’t have had the time or training to properly take control.
So, if you’re serious about exiting your business and safeguarding your long-term investment, there really is no time to hang around. You need to have a succession plan in place and start working on it now.
How easily you can transition yourself out of your business is going to depend on what type of business you own. But whatever the means, the objective is the same: you have to become expendable. The key to all of this this is that your business must be able to function while you’re not around.
The time-off test
Think about how your business runs when you’re not there. What happens when you take a holiday or book some time off? Do things carry on as normal, or do you end up dealing with problems back at the office while you’re hundreds of miles away?
Could you turn your phone off for a day, for a week or for a month and feel confident your business would carry on as normal? If you can, and you really could go weeks without any contact with your business, then you’ve already cracked it. You’re well on your way to transitioning yourself out of your business.