Though many of us want to believe otherwise, entrepreneurs and founders are not immortal, and we should not fool ourselves into believing that we are required to work right up until the moment when we can’t anymore. Whether it’s to retire and spend more time with family or to move on to your next great idea, it’s important that all founding teams take steps to prepare their venture prior to any transition.
But, you ask, when should I focus on that when I have a million other things to do? The hard to imagine – but truthful – answer is that you should start this planning process at least 5 years before you are hoping to transition from your business. Five years gives the time necessary for most established ventures to:
record standard operating practices in a way that others can understand.
engage with key employees to help them make the most of the transition and serve as key resources for the new leadership.
ensure that you are taking the best succession route possible with the help of experts, who have been alongside other organizations as they made this same transition.
What do you do if the transition needs to happen in less than 5 years? The good news is that it’s definitely doable, however it is not advisable for many reasons. The biggest reason is that rushed deals always make waste and leave opportunity on the table. However, there are other concerns as well. Hopefully you already have strong service provider relationships established, but if you don’t, gathering the best team of professional succession planners, lawyers, and accountants, takes time. Once gathered, these professionals need additional time before any moves are made to be sure they understand your vision for the future of the organization.
If you are forced to expedite the transition process, double check everything. Take extra care to ensure that your team of professionals understands what you hope to get out of the transition, that you have accurately recorded the relevant processes, and that you are capturing everything you hope to leave behind as your legacy.
There will be some who read this and think, “Good, if it’s possible to do in 5 years I’ll keep waiting.” I urge you to not think that way.
It’s never too early to start planning for a transition, even if that transition is still far in the future.
There are current-day benefits to this planning as well: having the business outside of your head and recorded in various ways is always valuable for any growing organization.
Lastly, if you are thinking, “But I want to give my business to my son, daughter, niece, nephew, etc., so I won’t need to plan for this,” I implore you to not put your family or close friends in that position. It doesn’t matter if you are keeping a business in the family or selling it to a private equity firm, the steps to prepare the business for that transition should be largely the same. If the business is going to a family member, you want to put them in the best possible position to continue your successful legacy. If it’s being sold to an outside party, a large part of why they are acquiring your company is often the legacy and history of success that comes with the brand. Either way, having the story and operations in order before these transitions happen can make things much less stressful for you during the transition.
If any of the above struck a chord with you and made you feel like it’s time to start this conversation so you can retire or move on to other ventures, please reach out and set up a call with us. We work with founders and business leaders during times of transition and we love learning about your business. Most importantly, we want to connect you with the best resources to help you with this transition and ensure that what you’ve built lives on. Entrepreneurs may not live forever, but their legacies can.