A Successful Management Transition

Are you thinking about transitioning out of a leadership role in your business? Stepping away from your small business does not have to mean giving it up completely. It could mean removing yourself from day-to-day operations or delegating management responsibilities to someone else so the business can continue to function smoothly without your constant presence.

In any business transition—whether it involves a change of business ownership or just a change in management, we encourage business owners to consider these steps:

1. Assess your current business

Before making any big management change, understand the value of your business and the strength of your existing systems. Be sure to ask key questions and audit your business.

  • Have you built business assets (both tangible and intangible) that have value?
  • Do you know what your business is worth?
  • Do you have operational systems that can be understood by others in your business?
  • Do you have key employees that could take on increased responsibilities?

2. Address training and control

To step away from the business, your employees need to be prepared to take on more responsibility. You have to be ready to give up some control. If senior members are taking the reins, they need to know the details of the business and understand what will be expected of them. You may need to hire new senior management who must get up to speed and gain your trust (and your employees’ trust). Any new manager (or eventual owner) needs to understand the business inside and out and develop the skills needed for success. Your role will be to facilitate all of this.

3. Take your time

In any big business transition – whether a change in business ownership or a change in management – a thoughtful, step-by-step process is ideal, if possible. A gradual transition allows for a new manager/owner to grow into their role. It can take time to gain confidence and also credibility with all stakeholders. As time goes on, you will be able to assume a more advisory (or backseat) role. By then you will be ready for it. If selling your business is the goal, you will need time to prepare for the sale and find the right buyer. So… look at a realistic timeline and set the right pace for you.

4. Get help

It can feel impossible to focus on a future transition while attending to the day-to-day demands of the business. You are managing services, employees, cash flow, marketing and day-to-day operations. How can you focus on your transition goals when so many other aspects of the business need your attention right now? An advisor, support partner or support group can help you create a transition plan. They can also help you stay accountable to the plan within a realistic timeline. Other professionals such as an accountant or bookkeeper can help you understand the financial health of your business and the ramifications of any change. At some point, you will need legal help, too. Get the professional help you need to hold yourself accountable and make the right decisions.

5. Your identity as a business owner

As a small business owner, your whole identity may be wrapped up with your business. You may think you want a change but you may feel reticent about losing control of the business and the change of personal identity the comes with stepping away. Perhaps you would no longer have a reason to stay involved with a merchants group, or you may no longer be invited to participate in certain business networks. Without your business identity, you may need to redefine or reinvent yourself. This is an important step to take!

As a small business owner, you pour your heart, lots of time and often lots of money into your business to make it succeed. After this investment, you want to get the compensation you have earned and see your business continue to flourish after you step away. Creating a solid transition plan with a realistic timeline and a good support team can help make this goal a reality.

Paul Terry & Associates help small business owners with transition planning, which could mean bringing in a partner, stepping back from a full-time management role and/or preparing for a business sale. For clients preparing or a management transition, we help you: 

  • Work through the challenges related to change and new roles
  • Install effective management metrics and timelines for the transition
  • Hire or train committed management staff
  • Create financial projections and estimate value for any transition
  • Produce and implement an exit/succession plan

Learn more about our ownership transition services.

Business Exit… have you thought about it?

Many tech entrepreneurs think about their business exit from day one. Acquisition is central to their business model. But most small business owners don’t think about it… they are too busy getting into business! An exit plan should be a part of every entrepreneur’s business planning process — though this is the least understood part of the business plan, and often ignored.

business exit

Don’t wait. Think about a business exit now.

No matter how successful you are in business and how much you love our work, you should think about what will happen to your business when you no longer actively manage or run it.  At some point down the road—a couple of years or decades from now—you will leave your businesses (or your businesses will leave you). Personal circumstances might change or burn-out could happen. You may be ready to pursue a new endeavor or want to retire. Or someone could approach you about buying your business.

Business exit options

You may not be able to predict your business’ success, your future interests, or the direction of the marketplace. But you can start thinking about the business exit options that could be a good fit for you.

There are a variety of ways to exit your business. You could pass it to a family member, partner, employee or other business stakeholder. You could sell it to an outsider. You could liquidate it and sell the assets, or you could file for bankruptcy.

How will you figure out what is best for you and your business?

Envisioning the future

We encourage you to think about the future of your business and what it might look like when you are not at the helm.

  • Is your goal to create a legacy business that will last forever?
  • Do you ultimately want to pass the business on to a family member?
  • When you are ready to stop running the business, do you hope to sell it?
  • Would you want the business taken over by an employee(s), partner or other internal stakeholder or would you want to sell to an outside party?

The vision for your business will change as your business develops and circumstances change, but thinking about your business’ trajectory, including your exit, is a key part of strategic planning and business growth. (If you are in a business partnership, it is important that you have an ownership agreement, from the beginning, that spells out what will happen if one or more partners wants to exit the business.)

Planning your transition

When you are ready to think seriously about transitioning away from your business, you need a business exit plan. Just as a good business plan is an important part of business start-up, a good exit plan is key to a smooth transition away from the business.

We help our clients through the transition planning process. This includes identifying or clarifying your motivations and goals, assessing the current strengths and weaknesses of the business, and creating a role transition or business sale timeline with clear benchmarks. We then help business owners stay accountable to their plan.

Our goal is to help small business owners feel ready for their next steps, with a feasible and straightforward plan to guide them through their transition.  Learn more about our ownership transition consulting services.