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Dear Oaklyn Consulting,
It’s been a really hard year. I own a business that I’ve been successfully running for the last 15 years. I’ve had some health troubles that have pushed me to a position where my doctors are suggesting that I need to retire early or step back from most of my responsibilities.
At this moment, I don’t have anyone lined up as a successor. I would like to see my business continue the legacy I’ve worked so hard to establish, and as a result, be able to leave my current role in the business and have sufficient savings for the next chapter in my life. So, I’m going to start the journey to find the right next owner for my business, whether it’s finding a person who can step in and keep this company growing into the future, or something else.
Where do I start in making a plan for this transition?
From Oaklyn Consulting
You have our sympathy for a hard year and an unplanned illness that is affecting your ability to work. The job of a business owner can be rewarding and also especially challenging when illness, injury, family responsibilities or death arrive unexpectedly.
It is not unusual that people do not have succession lined up when the time comes to need it. While the project of identifying and installing a successor is a large project, it doesn’t need to be done all at once like the flip of a switch.
In our experience, succession options tend to include these 5 choices:
- Developing and promoting a current employee into a position of greater responsibility.
- Hiring someone from outside the organization as a new leader.
- Allowing an individual to enter the company as a new owner by buying into the business.
- Selling a large portion of the business to non-executive investors, who will be your partners in identifying and hiring a successor.
- Selling the business to a larger organization, where there is existing management that can succeed you.
If you are an entrepreneur owner-manager, without non-executive investors or a board of directors or advisors, then this is a time to think carefully about the difference between your two roles, owner and manager. It might be that you can create more options for yourself by considering management successors distinctly from ownership successors. For example, maybe you can exit the business by simultaneously developing a talented employee who has skills but not capital (management succession) and attracting new owners/investors (ownership succession) at the same time.
Our work is helping business owners deal with the large project of changing ownership of the business, by identifying capital partners and negotiating transactions with them. Our experience is that often one goal of the ownership change is a management change, so we recommend that you think broadly about your options for succession before choosing a particular path to follow.
While your health challenges might make this time feel desperate, it’s possible that you have arrived at just the moment when your business can blossom with new energy, opportunities, and leadership.
