As soon as you start your business, you should be thinking about how you will hand your business over to someone else. You aren’t going to be running your business forever. At some point you will either have to sell your business or let a relative inherit it.
It is important to be sure that your business is worth handing over to someone else. Francois Botha wrote an article in Forbes magazine entitled, “Make Sure Your Business Is Worth Handing Over”. In this article Botha explores this very topic.
Botha emphasizes that family businesses should not “fall into the trap of prioritizing job creation for their children.” The priority should be to continue the business. Co-founder and chairman of The Leadership Pipeline Institute, Stephen Drotter, believes that the main goal of any business needs to be its suitability. Drotter established five principles designed to assist family businesses as they seek to prepare for succession.
Principle #1: Identify and Fix Your Problems
Current ownership should deal promptly with any business problems before passing a business on to a new generation.
Principle #2: Adjust Your Management To The Strategic Evolution Of Your Business
Businesses evolve from the creation of a product to sell, to focusing on sales, marketing and distribution, to finally addressing a plateau in sales. This facilitates the need to multi-functional management.
Principle #3: Talk To Your People About Them
Communication with employees is key. Getting to know and understand employees is vital.
Principle #4: Be On The Lookout For Talent Everywhere
There is no replacement for skilled and motivated employees. You never know where you may find them.
Principle #5: Provide Development
Employee skill must be seen as a key priority.
Careful preparation and a good deal of advanced planning is needed to make sure that a business is ready for transition to the next generation. The sooner you begin asking the right kind of thoughtful questions about the current state of your business and what will benefit it moving forward, the better off everyone will be.