Many entrepreneurs are capable of doing a number of different tasks from selling to the management of their business to understanding their product or services’ value-added features. While those unique abilities drive revenue and brought the firm to its current level, it is rare to find another individual who can do all that you can do. The risk of your business failing if you either sell or pass it to the next generation is high if you do not find ways to replicate what you do and how you do it.
Entrepreneurs often think what they do is easy. I have one case where the founder has a folder and in that folder is "everything his son needs to run the business." I pointed out that since his son is in the field all the time and not doing the books, finding customers, managing the database and booking appointments, that these tasks could prove challenging for him. What comes easy to the founder and makes perfect sense as he’s been doing it for 20+ years may be overwhelming for his son. (For related reading from this author, see: Successful Succession Plans Depend on Your Team.)
Process and Procedures
There never seem to be enough hours in the day for most business owners we interact with, so the thought of adding on more work to document what they do can fall to the “C” list. This “I’ll get to it someday” is likely to never really happen. Studies show that 60% of the reason businesses fail from one generation to the next is lack of communication and trust. One method if increasing communication is by having procedures in written form and discussing what is going on in regular meetings.
By having processes and procedures in place, the entrepreneur becomes less essential and there are documented processes and everyone in the firm can follow them. There is a clear roadmap for team members to follow to execute tasks and standards to adhere to which increases quality control. It is also possible to then begin to delegate tasks the CEO has been performing to other team members therefore mitigating the risks associated with a sudden illness or death of the CEO.
Just about every business owner I have interacted with likes to have control. The business becomes another baby and making sure execution is kept to a certain standard is important to the owner. Each person has their own style so it is likely that even with systems in place, the next generation or other team members may have a slightly different style or method of implementing. The CEO needs to realize and respect the talents of other team members and as long as the standards are kept to the company’s expectations they need to let others, whether family or team members, “own” the tasks and results. Easier said than done, I know. (For more from this author, see: Why Your Family Business Needs a Succession Plan.)
Analyze Skill Sets
Outside advisors can be valuable in assisting the company’s key players in figuring out what their core skill sets are and filling in those gaps or replicating the skills. They can do this by either training current team members or hiring with a mission to fill those gaps. The founder is often a visionary but also capable of getting things done. They may rely on their trusted accountant or other advisors to track the details but they keep their finger on the pulse.
Assessing core strengths as well as weaknesses can be very enlightening. Deliberately hiring to either replicate part of your skills or fill in the weaker areas can help to build a strong and resilient team. We all like to think we are immortal and most owners do not want to think about exits or death.
But the reality is that accidents happen and you spent your life building this enterprise. You owe it to yourself, your family and your employees to build in enough processes so that you become less essential. With processes and procedures in place, if a tragic event takes place, the firm can continue or be sold in a logical manner and not for fire sale price or just for the inventory. So take the time to stop and think about how you can become less essential and add processes to document what is inside your head. (For related reading from this author, see: Keep the Family Business Going With a Succession Plan.)