In This Episode
So what does it look like when you’re ready? Does it always look and feel the same? Kind of like when you’re lost? In today’s show we talk about how to know when the next generation is ready to take over. Like many things in life and business, it’s not always so clear, but there are some key things you can look for.
One of our areas of specialty in coaching is working with families to transition their business to the next generation. While there are many great professionals in the accounting, legal, financial advisory, and insurance industries to help with the nuts and bolts of the transition, we focus more on the day-to-day running and management of the company. So even if the deal gets structured for the right price in a tax efficient manner and with a payment plan that makes sense for the seller and the business, how do you know when it’s time to pull the trigger on that transaction?
Here are a couple of things to look for and be aware of when trying to figure out if that next generation is ready to take over the business:
- Current Duties: the person who is going to take over has a current role in the business, the question is how is that role going? Do they operate basically autonomously with little to no input from the current owners. Does that person seemed overwhelmed by all of those current duties or are they ready for more? Has someone been identified to start taking some of those current duties off their plate as they plan to step into the new role as Owner & CEO of the business?
- Help: let’s face it, we all have weaknesses. Chances are that there will be some overlap between the strengths and weaknesses of the current and next generation. The key is finding the help for the next generation to help plug the holes in their skill set when they take over the business. This could mean changes some roles and duties of folks who currently work in the business or going to find another person or two to hire and bring in. It could also mean working to transition that knowledge and those skills from the current generation to the next generation. Most things are teachable and one of the beauties of small business ownership is that there are always opportunities to grow.
- Temperature: what’s the temperature of the next generation? Are they bubbling over with excitement and anticipation because they can hardly wait to take over? Or are they dragging their feet on some key items. We are big fans of Missouri because it’s known as the “show me” state. We like to see that next generation showing that they feel they are ready to take over. Chances are it might sound like they are trying to push the current generation out of the way or perhaps they are complaining a lot about how things are currently run. Not too many folks are going to jump into running a business until they at least feel like they are mostly ready!
- The Team: how does the rest of the organization respond to this next generation? Do they follow the next generation’s lead or are they secretly (or not so secretly) dreading the current generation leaving because they aren’t sure what’s going to happen to the business? If the next generation doesn’t have the support of the current team it’s going to be hard for that next generation to be successful, especially in the near term.
While these are just a few of the situations we’ve encountered over the decades, they are some of the key items to be assessing when trying to figure out when and if that next generation is ready to take the reigns. As you might imagine it’s better to wait another few months or years to transition the business vs. forcing a change to happen to soon. If you do that, chances are the current generation will be back in trying to clean things up and running the business within the next couple of years. Keep in mind that the little things are the big things in success in day-to-day business as well as the transition of that business.
People, Companies and Resources We Mentioned in the Show
- Tommy Boy (https://en.wikipedia.org/wiki/Tommy_Boy)