Developing Your Own Successor is Nearly Impossible
Selling your business to a successor is a good way to receive the full value of your business when you retire. And the plan will work beautifully as long as the business makes all the buyout payments. But the business’ ability to make those payments relies on the successor not screwing things up!
In order to maximize the likelihood that the successor does a good job and makes smart decisions, he or she must develop their leadership effectiveness, their strategic thinking, and their judgment. And therein lies the challenge…
It’s nearly impossible for an owner to effectively develop their own successor!
Here are the five issues that prevent an owner from properly developing their successor and what to do about it:
Interpersonal Dynamics
In order for meaningful improvement to take place, open, honest, challenging, and confidential conversations with the successor must take place. But it’s virtually impossible for a successor to be completely open, honest, and vulnerable when those conversations are with the person who will decide whether they will be taking over the company.
The interpersonal dynamics between owner and successor make it nearly impossible for an owner to effectively develop his or her successor.
Blind Spots
Regardless of the number of years of experience we have, our level of intelligence, and the amount of education we’ve had, we all have blind spots. We can’t see what we’re missing. And because we have blind spots, it causes us to limit our thinking and the solutions we come up with.
Because getting past blind spots requires outside perspective, it makes it nearly impossible for an owner to effectively develop his or her successor.
Objectivity
Virtually everyone around a successor has an agenda – their co-workers, their spouse and especially the owner. They either want things to change or they want things to stay the same, so they want the successor to act and make decisions in a way that gives them what they want. But in order for a successor to hone their thinking and judgment, they need an unbiased sounding board.
Because getting objective perspective and having an unbiased sounding board are essential to improving a successor’s judgment and decision-making, it’s nearly impossible for an owner to effectively develop his or her successor.
Time Constraints
There’s a reason it’s called successor development and not successor training. The growth that needs to occur happens over time. Development occurs as a successor deals with everyday issues and then gets outside perspective to shift how they lead, think, and interact.
Most owners simply don’t have the time needed to give a successor the attention required for effective development. Consequently, it’s nearly impossible for an owner to effectively develop his or her successor.
Skill Set
Successful business owners are expert at the business of their business. They couldn’t have gotten where they are without developing that expertise. But the truth is that the skills that got owners to where they are aren’t the same skills required to effectively coach and mentor a successor.
Because coaching and mentoring don’t come naturally to most owners, it’s nearly impossible for an owner to effectively develop his or her successor.
In summary, it’s critical for a successor to be properly developed so the business thrives after the owner leaves and all purchase payments get paid. In order to maximize the likelihood of that happening, it is essential to bring in outside expertise to help complete the development of a successor. The risk of handing your company over to a poorly prepared successor is too great to leave their development unfinished.
Hear more from Michael at FABTECH during his presentation “Ensuring Tomorrow: How to Effectively Choose and Prepare Your Successor”.
Register to attend FABTECH today! 
