Start Here: The First Step in the Business Succession Journey – What Do You Want … Really?

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Business succession is a journey that begins with a clear goal. 

I “shred.” Not well. Not a lot. And if I am honest I have to admit that compared to most of the kids on the bunny-hill I look sort of like a clumsy yeti on skis.

Still, after a twenty-year gap I agreed to go with my son to Schweitzer Mountain in North Idaho and re-learn the art of skiing.
I signed up for a private lesson with Kurt Barbieri, a retired software engineer and now ski instructor. After a quick introduction and a short run down a very slight hill Kurt had a pretty good idea of where to begin.

I had a very clear idea of where I wanted to end up. “After our lesson,” I told him, “I want to spend the rest of the day skiing the Intermediate runs without hurting myself. Or others.”

Kurt thought a moment, then said, “Then we’d better get started.”
With a clearly defined goal, an expert guide and willingness to learn new – and even unfamiliar – skills, we succeeded. Just before noon Kurt and I got on the lift taking us further up the mountain and then, with his encouragement, I made it down. In one piece. Without hurting anyone.
Though satisfied, I wasn’t too surprised that we had met my goal. After all, my approach was the same I use when helping business owners work through the challenges of their business succession.

In her book, 9 Things Successful People do Differently, Heidi Grant Halvorson identifies common traits held by successful people. Having helped hundreds of business owners, partners and family members design and implement their business succession or transition plans, I’ve found that these same traits produce the most rewarding results.
The first quality seems obvious. And yet, whether growing or leaving a business is frequently looked over: “Get specific.”

She writes, “When you set yourself a goal, try to be as specific as possible. ‘Lose five pounds’ is a better goal than ‘lose some weight’ because it give you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there.”

Since Kurt knew exactly what I wanted he coached me, encouraged me, and increasingly added new skills I would need to reach my clearly stated goal. I wasn’t ambiguous: “I want to ski better.” I was specific: “I want to do down the Intermediate runs. Today.” When I first meet with a business owner, he or she usually has a general idea of their succession goals. These can range from, “Selling the company in about five years,” to “Retiring from my business in about ten years,” to “Letting my kids take over,” … You get the idea.

For a family owned business, the initial goals can be both broad and conflicting. It is not unusual for the Founder (or Leading) generation to be at odds with Successors; particularly when considering the manner and time in which ownership is transferred from one generation to the next. Going back to my earlier analogy, success comes when everyone wants to ski down the same hill. At the same time.

Before going too far in the succession planning process, it is necessary for everyone impacted by plan to have the same specific goal and objective. Three initial questions should be asked:

1. “What do you really want?”

Unless you’re a Miss America contestant (“I want world peace!”) that question can be difficult to answer. But not for Ron.

Ron had given his succession a lot of thought and when I asked him what he wanted he quickly answered: “I want to sell my interest to my son, giving him the opportunity to own and lead the company. I’ll sell this to him for $X paid over the next ten years. And I want to close the deal by December 31.”

Because he was clear, we reached his goal. Over several meetings with his attorneys, accountants, advisers and family members we outlined and completed the plan within the time he had set.

Owners who are clear about the timing (when), investment return (how much), successors (who); everything that contributes to a rewarding end of their active role in their company, will almost always be satisfied with the results of their succession.

2. “What will success look like? How will you know when you’ve reached your goal?”

This question adds clarity to the previous one.

For more than ten years Mark had been leading the distribution company founded by his parents. As a minority owner, he felt limited in what he could do and how he could grow the business.

His dad, Joe, wanted to turn things over to Mark but was worried about the risk. Over time, we helped them agree upon a goal (transferring complete ownership to Mark) and to agree on what “success” would look like after the goal was met. Once in place we quickly designed and executed the plan that increased Mark’s ownership (giving him the freedom he wanted to lead) while protecting Joe’s security and giving him a meaningful way to “ease” out of the day to day activities.

Before I started my lesson with Kurt, if anyone would have asked I would have pointed to someone skiing down an intermediate run and say, “For me, success looks like that!” Since I knew what I wanted to achieve (goal) and what this would look like (image) I had a great day.

3. “What obstacles are in the way of reaching your goal – of getting what you want?”

There are always obstacles.

And when planning your business succession or transition, remember that the tactical problems, though relatively easy to solve, may have a minimal impact on your success.

For example, in a family owned business there are several estate planning and tax mitigation solutions that should be considered and included in the overall plan. However, a great tax strategy will not remove the frustration, fear, distrust or confusion that may exist between generations. Until Founders (or leaders) are aligned with Successors the transition plan for a family owned business is likely to fail.

For me, getting back on the slopes was a challenge. Still, it was relatively easy compared to what owners and families face when transitioning from their business. Having a specific goal – a clear understanding of and a commitment to – what you want to achieve will help you create the plans and define the activities needed to reach this important milestone.

And when you do, join me on the slopes. Look for the yeti on one of the Intermediate runs.

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