Letting go

The challenge of being able to step back

Letting go

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Maybe you’ve built your business to a size where you have a leadership team in place and you’ve already stepped back from the day to day of the business, if this is the case then you are potentially ahead of the game.

Our advice to business owners preparing for exit is to begin to let go of the day to day of the business, build a team around your and delegate more.

Even if you’re not planning to exit the business for several years, it’s important that you run the business today with your final objective in mind. This includes thinking about how the business is structured, building the right team to take the business forward, getting the financials in good shape and avoiding over reliance on you the owner.

Having a business that isn’t dependent on you, the owner will undoubtedly maximise its value when you sell. It is crucial before you attempt to pass the business on or sell that you let go of the day to day running of the business and build the right team around you to do this.

For many owners, letting go is the single biggest challenge and indeed many business owners delay their succession planning because of this. Finding a successor or the right leadership team can be time consuming and difficult, so the sooner you focus on this, the better.

Changing your role from MD to Chairperson, initially as an executive role but eventually a non-executive role.
Mentally preparing yourself for the changes ahead, including changing team dynamics and relationships.
Changing how you spend your time from the day to day running to more time thinking about the future.

Mentoring your successor and the management team to take the business into the future.
Begin to take more time off to test the ability of the team to run the business without you.
Decide the involvement you may want post-sale including the 'how, when and where' you will work to avoid any misunderstandings with future owners.

Things to prepare yourself for...

When you have the right team in place, your role can change and develop over time on the run up to your exit. Maybe you’ll step away from being Managing Director or CEO and become Chairperson and take on a more strategic consultative role.

Changing your role

Changing your own role and helping your leadership team to take on more responsibility is vital before you exit the business.

Your people

Download our ‘Leadership Team’ questionnaire to help you assess your team and ask yourself the difficult questions.

For most businesses, people are the key asset. Ensuring you have the right, people in place and that they’re motivated and will stay with the business beyond your exit is vital. Without the right people your transition to exit may be more difficult.

You need to clearly understand the skills, capabilities and potential of the people you have in the business. This should be continually assessed and changed when necessary to ensure that you highlight skills shortages in the business and plan to ‘fill the gaps’.

Linking your succession planning needs to your training & development and rewards & recognition schemes will ensure that people are trained and rewarded based on stepping up an taking more responsibility and achieving your goals.

Your leadership team – the people who can run the business in your absence are key to not only your exit but increasing the value of your business. You need to look at your current team and assess the talent pool and their ability to run the business and achieve business goals without you.

If you need to recruit into the leadership team, consider the effect this may have on other members of the team and where possible get them involved in the process to ensure a smooth transition. Change often brings uncertainty. Managing this and ensuring continuity is key to ensure it’s ‘business as usual’.

It’s important to not put off big projects that will add long-term value to the business, even during your exit planning.

It’s tempting not spend the money before exit, but large-scale projects can not only add value, but make your business more attractive to buyers.

If your business is small, then growing it and building the right infrastructure could help you attract a wider range of purchasers or construct a management buyout. Without scale, it’s often difficult to sell smaller businesses that lack investment and infrastructure.

Considering a business acquisition on the run up to exit may be something you would never consider, but if you’ve begun planning for exit well in advance, this may be exactly what your business needs to give you scale, make the business more attractive and ultimately build value.

Download our succession planning checklist now

Invest and grow

It's important to push ashead with big projects that will add long term value to the business.