Surprisingly, many nice-sized companies operate with a one-word succession plan. How is that possible? Usually, they utter this powerful, yet dangerous, word to the likely successor and assume that the plan is complete. The problem is that is “plan” leaves more questions than answers. In fact, it actually hurts the business more than it helps because the owner has now checked the “Succession Plan” box in his head.
I am willing to argue that this one word actually could be the most dangerous word a business owner can say (not just in succession planning). What one word could be so dangerous to the long-term health of a company? …Someday…
“Someday, Junior is going to take over the business.” “Someday, you will be running the place.” “Someday…”
You get the idea.
Perhaps you have said this to someone. Perhaps someone has said this to you. If you are the former, let me shine a light on what is going through a successor’s mind. “Wait what… did she just say that???” “When is that going to be?” “How would that even work?” After a short moment of pride, the successor brain starts smoking with questions and fear (yes, fear). Depending on their Entrepreneurial DNA, they could gravitate to the, “what I am not ready, who is going to train me?” camp or the “What if it takes too long? What if he dies at his desk?” camp. Either way, it was not the intention of the business owner to create more questions than answers. To be honest, he thought he was doing some planning and beginning preparations for the successor to take the reins… someday.
A business owner attempts the one-word succession plan for several reasons. For one, they are not ready to commit. They are still the boss and still happy with being the boss. Would they like more time off? Sure, someday. However, now is not the time. Next, they throw out the comment in front of a business colleague off the cuff to see how the successor will react. Maybe he needs to know if Junior is going to have what it takes to step up to the plate and fill his shoes. Maybe he needs to plant a seed now thinking this will keep the successor from leaving. Another reason may be, like death, planning to live without their business is too painful and not fun to discuss. Finally, the most common reason (I believe) is because they honestly think it is succession planning. The plan is… I tell Junior, he steps up, and he buys it from me… someday. An actual plan is an abstract idea in most cases.
Maybe you have done your succession planning this way. Now what? Hopefully, your successor has not moved on because they were tired of waiting or feeling too much pressure. Now is the time to back up and review what to do to actually create a succession plan that brings more answers than questions for the business owner and the successor.
1. Find a Guide
Whether it is a book, boot camp (the Success Tree Succession Planning Boot Camp coming in February 2016), advisor, coach, or best friend- find someone that has gone through this before and can walk you along to develop all the steps necessary to build a solid plan.
2. Talk it out
Start talking with your successor on a regular basis. Take him or her to lunch or have a set meeting every week. This strategy is two-fold: 1. Start to pour your knowledge and insight into them. 2. Start to build a trusting relationship. Naturally, you both will begin discussing logistics and expectations of the succession plan. This mutual trust will be crucial in the days ahead.
3. Write it up
Work with someone to help you draft the plan. I do not mean a huge-binder-that-sits-on-a-shelf plan, but a constantly-changing-and-updating type of plan. Maybe it starts as a one page document outlining a timeframe, an estimated value, a proposed buyout. Work to set clear objectives and milestones for the successor. You will also want to plan out how and when to tell the stakeholders like employees and clients. The plan will get more and more detailed as time goes on.
4. Actually do it
By now, you have a stronger relationship with your successor. You have had many conversations on the matter and have done your best to answer as many questions as possible. You also have identified the key points of a possible agreement between your successor and yourself. The importance of living out the plan cannot be ignored. In business, you must do what you say you are going to do. This is no different, but perhaps, more critical.
Some days it will be scary. Some days you will wonder if you are making a huge mistake. Some days you will wonder if the day will ever come. With proper planning, you can rest assured that your day to ride off in the sunset will come… on the day of your choosing.
