Many people build a business focusing on what they are coming from. They are tired of the corporate rat race. They want independence and freedom. They start a company to get away from situations or circumstances they dislike. I get that.
An often overlooked component is what you are building towards. What is your long term plan for your company? Are you building it to make money, to pass it on to your children, or to sell it for a profit?
It’s very difficult to build a great business if you don’t know where you are going. If you haven’t given this concept much thought, read on to discover some insights that will help you build a great business.
This is not a new concept, but few people actually do it. Have you taken the time to project into the future to envision a fully developed business? If so, what are your plans for that business?
Your plans for the business should shape how you build your business. For example, if you plan on continuing to work for many years, you will likely build the business based on your involvement. You like work. You want to work. Retirement is not something you see in your future. As long as you are physically able to be present, that is your plan.
In contrast, if you have plans to step aside at a certain age, then you will build your business differently. Instead of building it on your personality and abilities, you must create clear SOPs that do not require your involvement. You look for employees that can take over key roles and move the company forward without your involvement.
Unfortunately, many business leaders do not give the end much thought. They just build hoping that one day everything will just automatically come together.
A much better way to build a business is to determine its end, even before you build. Doing so will guide you in how to build it.
Planning for the future is essential in building a great business. It’s important that you know what you want to do. It is also important that you develop a plan to get there.
For example, many business owners build a business hoping that their children will take over the company one day. They never think to involve their children in their ideas. Their children have their own ambitions and desires. They may not want to be involved in the “family business.” Often, both the owner and the children get hurt through innocent assumptions that could have been avoided.
Even if you want your children to take over one day, and they want to do so, it’s important that you develop a plan (including a timetable) of how that might happen.
For example, when a family member is just brought in to take over, employees often resent such a move. Although the owner has the right to do what he or she wants, the manner in which he does things makes a difference. One approach might be to start your child young and at the bottom of the totem pole. Force him to work his way to the top. Doing so will create respect among the employees. They will see him as having earned the right to lead.
Another approach might be to direct your child to go out of the company and earn his credibility in the world. Doing so will toughen him up and prepare him for taking over your business one day. When the time comes to bring him back in the family business, he has gained a great deal of valuable experience outside your organization. No one can suggest you exercised favoritism towards your child. He earned his own way through life. Now that he has developed personally outside your company, you can bring him back knowing that he is ready to lead your company.
There’s more than one way to prepare your child to take over. However, you need to think about the best way for him to do so. Don’t just assume things will happen. If you do, you will likely be disappointed. You may also create a great deal of stress for your child AND lose some valuable employees in the process.
Don’t assume that your employees will be prepared when you step aside. Developing employees who can step up when you step aside often takes years.
Investing in them over time assures that you have them placed properly in the organization and that they are prepared for your departure.
It’s rare for an owner to invest in his people. That’s sad but true. Employees long for ownership to see their value and invest in their future development. When an employee has an owner who does this, it creates loyalty. Employees sense when you give thought to their future. They also sense when you don’t. They feel used and undervalued. It causes them to look for another job.
Everyone’s situation is different, but regardless of your future plans, it’s important to prepare key employees for your transition.
You don’t have to share the full details initially, but you do want to develop a plan that equips key employees for the future. Make sure that key employees have needed skills or experiences. Over the years, you should train and develop them for what’s coming.
As you age, people get nervous. They see that things will likely change in the future. An indefinite future makes employees nervous. They don’t know what’s coming. If you don’t lay out your plan, they will envision their own idea of how things will happen. When they do so, it is rarely to your advantage.
You want to prepare yourself for what’s coming. Many people struggle with retirement because they don’t plan on going to something. They only plan on coming from something.
Without realizing it, when you own a business it becomes your life. It’s what you know. It’s who you are. It is your life. Leaving your life as you have known it for years is not easy.
There’s only so much golf you can play. There’s only so many trips you can take. You have to think beyond what you will do immediately.
You might be thinking, “Look, I’ve worked long and hard, I am looking forward to a break.” I get that, but people who have been busy their entire lives don’t do well sitting on the sidelines. They get edgy.
I know of one acquisition company that spent a great deal of time helping an owner prepare to sell his business, only to experience the owner backing out of the deal because he was not prepared to retire.
Have you given much thought to what you will do when you retire? You don’t have to sit home and watch television all day. In fact, doing so will likely shorten your life. You may not want to be as active as you have been most of your life, but you should stay active.
Staying active will be different for different people. For some, it may mean volunteering at various organizations. For others, it may mean mentoring young people who desire to learn their profession. The important thing is to prepare yourself to execute your retirement plan.
Presently, there is a plethora of business owners who want to sell their businesses. Some of them have wisely prepared to do so. Most of them have not.
If you haven’t already done so, give your long term plans some thought. Don’t allow time to slip up on you. Give deep thought and make plans before you step down as the owner. Doing so will reduce your stress, increase your results, and make that transition a much smoother experience.
Dave Pennington PhD