Successful entrepreneurs must think through how and when to leave the top job.
All the right intentions:
Jim nurtured the company from a garage startup to an enterprise making $40 million annually. To ensure a smooth transition, Jim met monthly with Robert, his new president, to review the company’s performance. At one such meeting, Jim noticed Robert’s last item on the agenda: “Jim’s Schedule.” When they got to it, Robert said, “Jim, if I’m going to be successful around here, you can’t be here as much.”
Shocked, Jim thought, “What will I do? The company is my life.” Then he thought about his hobby farm and his boat on Lake Michigan and decided, “I’ll be fine. I have plenty to do.”
A few months later, the last agenda item was once again “Jim’s Schedule.” Jim said, “Well, Robert, at least I’m doing a better job of not being around as much.” Robert shook his head slowly. Jim’s continued presence in the company undermined Robert’s leadership. Jim could not, in his mind, “quit” the company.
The decision to step down and retire is one of the hardest a family business entrepreneur ever makes. But entrepreneurs don’t have to retire and leave their companies. Instead, they must change their job description. Jim should become the architect and designer of new ownership, management and leadership systems. He should be the lead family member to organize and build consensus on family values and family philanthropy. He doesn’t have to quit; he must lead from a new perspective.
In my 30 years of consulting with family-owned businesses, I have seen many entrepreneurs who failed at the “letting go” process. The breakdown tends to come from a failure in communication.
Don’t forget a key player in the business succession plan is the spouse. A company once hired me to do its succession planning. Accountants had created a tax-driven plan that would save an enormous amount in taxes. It allowed Allan, the entrepreneur, to retire immediately and to spend winter months in Arizona.
During a briefing with the accounting firm, Allan quickly warmed to the idea of spending his winters in Arizona. Allan’s wife, Helen, was not present.
The accountants later presented the logic, tax savings and value of the plan to a wider group that included Helen. She slapped her hand on the table three times as she yelled, “I’m too young for my husband to retire!” Allan did not retire for another five years.
In a second succession planning case, my client, Roger, shared his dream for his life after leaving the company with his family. He wanted to play golf in Florida for four months every winter. Roger Jr., Roger’s highly capable son, was ready to take over the company and supported his dad’s dream.
Roger’s wife responded, “That’s fine. I will be happy to come down and visit a couple of times. But our grandchildren, our friends and our church are all in Minnesota. You can go to Florida, but I’m staying here.” The succession plan was stymied because Roger and his wife had not talked things through.
When we start playing the back nine, we are called to develop a new dream with our partners—for work, family, leisure time, service and philanthropy. Jim and his wife, Becky, created a new dream for their future that includes sharing their story and what is most important to them with their grandchildren.
Family-business entrepreneurs make implicit contracts with their spouses that concern the businesses. It may be unspoken and implied as they take on roles to meet the needs of the businesses.
By the time a married couple are in their 60s and 70s, however, they need to be more explicit about their expectations. They need to be specific about plans and not merely assume that their partner knows what they expect.
Both spouses need to share their new dreams and include the younger generations as part of that dream. They must work together to support the transition, determine their new job descriptions and communicate their intentions.
✔ The decision to step down and retire is one of the hardest a family business entrepreneur ever makes.
✔ When the time comes, entrepreneurs don’t have to retire and leave their companies. Instead, they must change their job descriptions.
✔ Rather than undermining the new leader’s authority with their continued presence, founders should become the architects of their company’s new ownership, management and leadership systems.
✔ Stepping down is not quitting—it’s leading from a new perspective.
See the original article on Twin Cities Business Mag