Preparing for a Graceful Exit
Choosing & Preparing a Successor Takes Time
Written by Deanna Hunter
The BDC says that 3 in 5 owners of small to medium-sized businesses in Canada are 50 or older and a good many of them have done no planning whatsoever for a business transition, let alone choosing and preparing a successor. The lack of planning is sometimes about not having the time to think about it. Its often about not knowing how or where to start. And of course for some its just that they can’t imagine doing anything else so why create an exit plan?
There are lots of moving parts involved in business transition. In all cases, its best to get advice from various experts such as lawyers, business coaches, insurers, and so on. The expertise of an HR practitioner can be critical for choosing and preparing a successor. The person or people you want to take over the business. It could be a family member, an employee or someone from your management team, or even an outside buyer. This piece of the transition is likely going to take the most time and energy. It could take months or even years depending on your business.
Essentially what you need to do is select, train and mentor an individual to ensure the graceful exit you are hoping for. When looking for someone you have to be guided by the needs of your business and avoid emotional considerations. You’ll be looking for and assessing carefully, things like evidence of commitment, the necessary skills and experience, personality and ability to lead and motivate people. You may have someone in mind or may be starting from square one. If you are starting from square one you can plan for up to a year to get the right person in your sights.
Then there’s the time it will take to teach the individual how to run the business once they are on board. The time required for this part of your plan will vary depending on whether you have a current employee identified, or whether you have found someone externally. It will be all about passing on knowledge. They may need formal training as well as informal training. You may want them to gain hands on experience by rotating through various parts of the business. And they will definitely need your mentoring and coaching. Again, this could take months to years to complete.
Part of your plan will be to set a timetable for transferring power and ultimately ownership. Perhaps you’ll be testing their readiness by lessening your involvement over time and giving your successor responsibility for making some important decisions. Again, this will be dependent on the operation, your successor and you.
You may be one of the small business owners who is not thinking about business transition at all. Or you may one of the few thinking about retiring, passing the business on to a family member, or thinking about the risks associated with having to make a quick exit due to illness or some other reason out of your control. Whatever the case, if you want to make a graceful exit there’s no time like the present to begin to plan for your succession.