Typically a business needs years of preparation to enable its owner to exit successfully.
The first time Phil*, a business owner with whom I had been working to create and implement an exit plan, called to tell me to, “Get this project moving!” I have to admit that I had no idea what was going on. For three weeks I’d been leaving messages for him without response. I needed Phil to be more available as we continued to transition management tasks and responsibility to others in his business. His focus was key to developing more transferable business value.
Phil and I had discussed that as long as he remained the hub of all that happened in the business: 1) few buyers would be interested in buying it and 2) no one in management would be able to run or buy the company. He understood that as management teams become more experienced, businesses and therefore business value rely less on their owners. Value becomes transferable to others.
Transitions from owner to management take time: usually six months to two years. Shifting duties and responsibilities is purposely incremental so that, unlike a retirement, most of those involved don’t even notice the transition.
But I didn’t expect Phil to flip the transition switch so suddenly. When he finally returned my calls, it was to tell me that he’d just returned from his longest ever—three-week–vacation. During his time away, he rediscovered fun and was ready for a lot more of it.
While I had been preparing to gently remind (okay, nag) Phil to move forward he wanted me to light a fire under his advisors. I hadn’t anticipated that one whiff of freedom from the business would motivate Phil to put the pedal to the metal. “I’ve got at least ten projects I want to get busy on! I think we can speed up this transition!”
Upon reflection (and after several more owners reacted in exactly the same way), I realized that owners’ fear of the unknown (“What will happen if I exit my business suddenly? Does starting to plan for my exit mean I’ll be leaving right away?”) keeps them from initiating exit planning.
In reality, sudden exits seldom happen. Typically a business needs years of preparation to enable its owner to exit successfully, years that provide the owner time to transfer from headliner to supporting actor. Objectively, owners may recognize that a business can’t be successfully transferred unless this change takes place. Once they inhale that first whiff of freedom, however, they are anxious to speed up the process.
If you are dragging your feet on planning your exit because you are a little uncertain about being suddenly expelled from your business into a new life of uncertainty, stop. It is your exit plan: you set the pace. That pace may be slow, but I will bet a cup of coffee at the nearest coffee shop that, like Phil, once you take your first breath of freedom, you’ll never look back. You too will charge ahead.
*I have altered identifying details about this owner and all others mentioned in this blog.
