There comes a time when every entrepreneur must think about succession. A business transfer, regardless of its nature, needs to be prepared for. As entrepreneurs, we want our business to have a future, so we need to be prepared to let go! Still, succession planning is too often lacking because we are reluctant to have someone else take over, afraid that no one can take the same good care of our baby as we do. We may also shrink from the word “retirement” and worry about no longer feeling useful, or have difficulty finding or choosing a successor.
I say “we” because this applies to me as well. As co-founder and president of Aplus for the past 15 years, I, too, must prepare for the future.
So, as entrepreneurs, what are our options? We could choose to simply sell to secure our financial future and move on. That, too, is something that needs to be prepared for, but it is not the subject of this post.
Planning for withdrawal from a business needs to be initiated several years before the planned date. Regardless of the chosen approach, an unplanned transfer can be disastrous for the business and lead to substantial insecurity for employees, managers and customers.
And unfortunately, if we fail to plan, we may be forced to sell to outside interests or liquidate our business.
To avoid such a scenario, let’s take a closer look at succession planning.
While a well-planned, well-executed transition period is necessary, I've seen many entrepreneurs and business owners who find it much more difficult than they expected. Why is that?
The choice of successor or successors can generate tension among family members or company executives, making it potentially a difficult and emotional decision. This period can create a lot of disputes and disruptions that can affect employee motivation and customer confidence. Unfortunately, that can lead the business to fail, which we all agree is to be avoided. This may be one of the reasons entrepreneurs delay or hesitate to plan for succession.
Although passing the torch to a family member is often the entrepreneur’s fondest wish, it is not always possible or may simply not be the best option. Children do not necessarily have the entrepreneurial bent of their parent. An alternative is to find an internal successor, someone who knows you well and in whom you have confidence. This route, however, risks causing unhealthy competition within the company.
As an entrepreneur, your first responsibility is to decide when you plan to retire, so that you can determine when to start preparing your succession. Then, you will need to identify WHO is capable of taking the reins of your organization. This decision calls for setting aside emotion, keeping your head and staying focused on the needs of the business. The ideal candidate must:
Objectively, it may not be possible to identify the right person internally. If you've planned far enough in advance, though, that will not be a problem, because you can still search externally. But be careful! You must prepare your teams so that the arrival of an outside person does not create turmoil and resentment. There are organizations that specialize in assessing succession candidates from among both family members and existing staff.
Now that you have made your decision, the transfer work begins, and it doesn't start with the successor in question, it starts with you. Successfully transferring a business means being ready to step aside, make room for the next generation and accept that things will be done differently from the way you did them.
You must use the next few years to prepare the chosen successor, which means:
Once you have clearly identified your successor and announced it to your team (there may be a lag between the two), your role will change. Rather than making all the decisions and pushing your vision of the company, your job will now be to make yourself available for the next generation.
Your successor will need to have a free hand. You will have to let them take their place, discuss their vision. This must be done well before you leave the company or they will never be ready.
Your goal should be to make yourself less and less indispensable to the company. Plan to be away more often.
In conclusion, if we do not want to be the biggest obstacles to the success of our business transfers, we have to accept to step aside well before leaving. We must show total confidence in our successor and support them in their new role of entrepreneur.
Co-founder, President and strategic advisor