Critical Thinking: Business Owners and Succession Planning

In his best-selling book “The Seven Habits of Highly Successful People”, Stephen Covey notes that one of the major habits of uniquely successful people is the ability to balance short-term challenges with long-term, intentional strategic thinking.  He summed it up with “begin with the end in mind”.

Business owners preparing for their next stage in life must consider and focus on three important timeframes.

  1. The short-term, reactive focus on generating revenue and servicing clients.
  2. The intermediate-term focus on protecting their interest in the successful business.
  3. The long-term focus on maximizing the value of the business.

Advisor specialists are needed to help to develop the necessary mindset and to provide practical guidance on long-term planning for and executing a successful succession plan for the business.

Most owners operate under one of two types of models: the heroic individual model or the efficient institution model.

The heroic individual sees the world from a narrow, short-term timeframe.  The heroic individual’s assumption is that by focusing on the immediate issues, the business will grow and prosper.  Caring for these more immediate challenges are important to the success of the business but they are not the only thing that’s important.

The leader of an efficient institution sees the world from an expanded timeframe.  They have a strategic mindset that looks outside themselves for solutions.  Their philosophy is not simply to generate revenue and profits now, but also to build for an orderly transition to the next stage of life.

Many successful owners are heroic individuals.  They are indispensable to the success of the business.  They have built a business in which they are the top performer and the primary value proposition.  While this may be gratifying, it often results in a critical weakness.  When it’s time for the owner to leave, the key value proposition goes away.  Shifting the owner’s mindset from heroic individual to efficient institution is critical.

Now is the time to start your journey.

 

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