The biggest factor behind a successful succession is knowing when to step aside.
If you are serious about creating internal successors within the business you have built up over your career, then there are some important issues to consider.
The biggest of these is your specific plan and timeline. If you have been talking about succession for too long, some of your team might not be taking you as seriously as you would like.
You might be certain you are phasing out and eventually leaving them in charge but they will not be feeling that if firm actions are supporting your words.
Why is this an issue?
Let me relate a story of one of my old clients in my former financial planning business in Sydney.
Charlie is 55 years old at the time (about 20 years ago) and has just taken over the family business. His dad, who is 75 years of age, has just retired. Dad continues to take a significant wage from the company even though he no longer works there, saddling the business with a major cash drain.
In Dad’s patriarchal generation it was completely cool to work until an old age and then hand over the company to number one son. I say it was cool. What I mean is it was socially acceptable; it was never good business.
Why? Because number one son was full of energy when he was 30 or 35 years of age. By 55 he is thinking of retiring himself, and certainly does not have the energy and enthusiasm he had 20 years before.
When it is someone else’s business you can see the obvious problem here. Dad could have handed over when he was 55 rather than 75, and mentored number one son to take the business forward to another level.
So let’s talk about you:
- I am assuming you are committed to internal succession rather than external sale of your business.
- I get that you created your business and that it is your baby.
- I know that you love your job and might not feel quite ready to hang up your clogs just yet.
However, if you are serious about succession, then you need to be prepared to modify your role within the business.
You do not have to resign. You do not have to stop dealing with your 30 best client relationships. You can still be there five days per week if you want to. But you can also consciously step aside and take on the chairperson or mentoring role.
You need to give the reins to your new leader or group of leaders. Let them have their go while they are full of beans and new ideas.
The mental shift
The key is getting your head around the fact that mentoring the next generation of leaders, while you stay involved, is a fulfilling role in its own right.
So why not embrace that? Let the new leaders take over and then simply provide wisdom, guidance and council when requested. And it will be requested. These people are not stupid or arrogant. They do not step in thinking they know it all. Quite the opposite.
Most things the new leaders do will be good for the business and may even be things you really struggled with.
In one business I am working with, they have to let some of the smaller clients go. They do not fit what the business has become and certainly do not fit where it is going. For the existing owner, this is a huge emotional wrench but it needs to be confronted and dealt with. The new leaders are doing it.
Let the new leaders lead. Let them make mistakes and learn from them just like you did. It is how we get better.
During this process, you might even believe a particular decision will end in failure, only to see it work out brilliantly and take the firm on to a new level or in a new direction. Now you get to learn something too.
The satisfaction for you comes from seeing the business you created, and the leaders you mentored, move onwards and upwards, beyond what you could have done yourself.
You get to tell your clients how proud you are to have created a legacy that will be here beyond your lifetime. This means the clients will not worry about what happens to them after you have moved on.
That is the mark of a quality business person with humility and foresight. It will gain you huge levels of respect and admiration among your clients, your team, your family and the local business community.
What better way to finish your career.
Brett Davidson is founder of FP Advance