Judy owned a large automotive towing service chain. For years she worked five and six days a week. When we first met Judy, she had grown tired of the effort and was determined to turn over the business to her two top employees as soon as possible. She admitted that they were not as ready as they should be, but Judy was burned out and believed that she wasn’t giving the business the time and commitment it needed. Less than a year later she turned over all daily operations to these key employees.
I saw her a few weeks after making the change and asked how she was doing. “Well,” she replied with a smile, “you’d be so proud of me. I took a vacation with my family. I do not go to the office every day. As a matter of fact, I have not been to the office for three straight days.”
“That’s great,” I said, genuinely happy for her.
“No,” she said, “it’s not. I haven’t slept a wink since.”
Engineers, architects and contractors don’t erect a building without a site plan. Surgeons don’t cut into a patient until exhausting every relevant medical test and scan to understand what they face. Transferring your business to top employees requires just as much assessment and due diligence – commonly referred to as a feasibility study.
The feasibility study should review the current situation and assess what it will take to hand off your roles and responsibilities without adversely impacting the business – or you. Consider the following:
- What are your roles and responsibilities today? Which ones do you like and not like? (Most owners hold on to responsibilities they like.)
- What are each of the top employee’s strengths and weaknesses?
- Among your top employees, who aspires to be the next CEO?
- Are there any holes or weaknesses in your management team today? If yes, how will the holes be filled?
- How will other employees, customers, suppliers and lenders react to a transition? What can you start doing now to assure a smooth transition?
- Under what circumstances will you comfortably transfer strategic control of the business?
Innies (owners who intend to pass their business on to an internal group of employees) must address these issues very early in the game. Your team may not be ready, willing and able to buy your business today. Perhaps one or two key positions need to be filled, or you don’t have a successor CEO within the group. One or more major obstacles usually surface when the transition begins. Start planning now, and you can sleep like a baby later.
