One of the first things to sort out is when you’re going to leave. Have this worked out well in advance, and take into consideration things like family, finances, your health and the state of your industry. Document everything, so that the new owner can run the business without you. Create manuals that outline all your operating processes.
Although it’s not a good idea for everyone to know you’re planning to step down, there are some people who should be kept in the loop, such as suppliers. Introduce the new owner to them if possible.
Prepare your successor
The better you prepare them for their new role, the more successful the handover will be. How you go about it depends on who the new owner will be. For instance, if you’re handing the business over to family make sure they have a genuine desire to run the business, and the necessary skills. You want to be sure they’re in it for the long haul.
If you’re selling to employees, whether it’s a manager, a group of employees or a set of shareholders, it’s important that everyone is aware early on of your intentions.
In either case, there are some critical steps you need to take to prepare the new owner:
- Let them watch you work. They need to learn as much as they can. Continually explain why you do things a certain way and how you make decisions.
- Dip their toes in by letting them make some decisions, with your guidance. Work together on key projects. Encourage and correct them.
- As they gain in confidence and ability, give them more decisions to make, with you as an advisor rather than guiding them. Let them make mistakes and show them how to fix them. It’s the only way they’ll learn to deal with failure.
- Give them total control. Encourage and empower them so that they are truly ready to run the business without you. This is one of the greatest challenges for most business owners.
As you’ll see this process works by gradually easing you out, as they ease in. Following these steps is essential for successfully delegating control. Handing over the reins in one fell swoop almost never works, as the new owner is left feeling overwhelmed and without the necessary skills, while you walk away from the business knowing you’ve left it in the control of someone who doesn’t know what they’re doing. It’s not the kind of legacy you want to leave behind.
Transferring assets and control
When you’re transferring your assets to the new owner, get them valued first by an expert so you can get an idea of what you’ll be paid for the business, if you’re selling it.
Put together a transition team who’ll help you transfer control. They should be people who are not emotionally involved, like your accountant, lawyer, or a business broker. Maintain open communication with your team and your successors.
Once the new owner has taken control, all decisions are theirs. And now it’s time to do the hardest part of all – walk away.
Believe it or not, this can be harder than it sounds, especially if you’ve built the business up from scratch, put in the hard work and seen it become a success due to your sweat and diligence. If you’re passing it on to family, or to employees, the process of letting go becomes easier if you follow the steps above, since it’s a gradual process and gives you time to get used to the idea. You’ll also feel confident that you’re leaving the business in good hands.
Once you’ve walked away, don’t continually check-in or drop by. Staying away can be tough, especially if you’ve passed the business on to family. They won’t thank you for continually dropping in after you’ve stepped down, so resist the temptation to do so unless they’ve specifically called on you for help. That said if the business is having a function such as a Christmas party or someone’s leaving, and they invite you along, by all means, go! Attending social functions means you can still see your old colleagues without sticking your nose in where it doesn’t belong.
If you’re retiring from work altogether, make sure you have a plan in place. When you make the decision to sell or step down, decide what you’re going to do with your days instead. Just because you’re no longer going to work doesn’t mean spending your retirement in front of the television. Decide what you’re going to do with the next stage of your life and then get stuck in – you’ll be too busy to worry about what’s happening with the business!