Are you thinking about transitioning out of your current management role in your business? Stepping away from your small business doesn’t 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 five factors:
1. Assess or audit your business
Before making a 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 that have real value? Do you know what your business is worth? Do you have operational systems that can be understood by others? Do you have key employees that will take on increased responsibilities?
2. Support and train others
To step away from the business, your employees need to be prepared to take on more responsibility… and you have to be ready to give up some control. If family 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. Any new manager (or eventual owner) needs to get to know the business inside and out and develop the skills needed for success. Your role is to facilitate all of this.
3. Take your time
In any transition – whether it involves a change in business ownership or just a change in management – a gradual process is ideal. This allows for a new manager/owner to grow into his/her role. It takes time to gain confidence and also credibility in day-to-day management for all stakeholders. As time goes on, you may be able to assume a more advisory (or backseat) role… and 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 and accountability
It can feel impossible to focus on a future transition when there is so much to attend to with the business right now. 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 and stay accountable to the plan within a realistic timeline. Other professionals such as an accountant 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 help you need to hold yourself accountable.
5. Your identity as a business owner
As a small business owner, your whole identity may be wrapped up with your business. You may want a change but you may feel reticent about losing control of the business and the change of 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.
As small business owners, we pour our hearts (as well as lots of time and often lots of money) into our businesses to make them succeed. After this investment, we want to see our businesses continue to flourish even after we step away from full-time management. Creating a solid transition plan with a good support team can help make our can help make desires a reality.
Paul Terry & Associates works with small business owners who want to value their business, prepare for a business sale or step away from a full-time management role. For clients preparing for a management transition, we can help:
- Work through the challenges related to change and new roles
- Install effective management metrics and timelines
- Hire or train committed management staff
- Create financial projections for any transition
- Help the owner(s) write a succession plan
Learn more about our ownership transition services.