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.
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