In This Episode
For those unfamiliar with the term “third rail” we’ve including a link below talking about it’s definition in politics. The metaphor comes from the high-voltage third rail in some electric railway systems. Touching that third rail often results in electrocution so most folks don’t live to tell about it.
Well the same thing can happen with a business transition from one generation to the next. The problem is most folks don’t know that the third rail exists. By the time they figure it out it’s usually too late and they’re gone. We see it all the time in family business transitions. And many of these third rails are things you might not be thinking about.
One of the biggest third rails we have found when it comes to a business transition has to do with the current owner who usually has nowhere else to go. So why is this a problem? The last thing you want as the new business owner is for the old business owner to be hanging around. It causes confusion, especially among your team who are trying to figure out who they should listen to, the old boss or the new one! So if the current owner is planning to stick around, be sure their job description is very clear and that you ensure you are in charge as the new owner.
If the current owner is planning on leaving, be sure they have a chance to test run what things will be like when they leave. For example, if the current owner plans on traveling a lot after selling the business, encourage them to take a several week or several month vacation and see how it feels. Chances are pretty high that what they envisioned in their mind will be very different from reality. Try to encourage the current owner to get more involved with their hobbies and other interests outside of work. If they don’t have any hobbies, encourage them to start investigating some. It’s important for that current owner to have something they are retiring to vs. simply retiring from.
Another third rail that is often missed is something we refer to as the “power of mom”! Whether mom is actively involved in the business or not, she wields tremendous influence when it comes to her spouse and children. It’s important to appreciate mom’s ability to either torpedo the transition or build bridges to help reach its completion.
Whatever the case may be, it’s important to be aware of these and other third rails when it comes to transitioning your business. We shared several examples for how things have gone well and not so well in our time as coaches. If you’re in the process of planning your transition or even currently going through one, you’ll want to tune in for today’s show!
People, Companies and Resources We Mentioned in the Show
- Third Rail Definition re Politics (https://en.wikipedia.org/wiki/Third_rail_(politics))
- An Officer and A Gentleman (https://www.imdb.com/title/tt0084434/)
Join Us Next Time
Join us next week when we will chat about buying a company with a focus on How Do I Find A Company To Purchase? It helps to be looking in all the right places!