Top 5 tips for when you own the business but are ready to step back from its day to day running
One of the most frequent times that a medium-sized business will seek out the help of a coach is right at that point when the people who own the business are thinking of stepping-down from its day-to-day management. I’m reminded of the times when business people I know have described the “big gambles” they’ve needed to take to be successful. There’s several such big gambles including: starting-up in the first place, employing your first team of staff, buying or committing to big new premises, expanding to new markets, and many others. One person I know described them each as “an opportunity to bet your house”! Of course, each of those is also something to celebrate and I often suggest that clients regard the decision to step back from the day-to-day running of their business as (just) another opportunity to ‘bet your house’ and something to celebrate!
When I’ve seen this process be successful, here are some of the factors that I reckon were involved in making it work:
1. Start with the end in mind
What do you want to achieve by stepping-back from the day-to-day running of your business? It could be any number of things: from a desire to work less yourself, through to a deep understanding that the business now needs somebody else to take it to the next level.
Imagine a flourishing future scenario, say ten years after you handed over the reins. What positive changes would you want to have seen happen in those ten years; for you personally, for the other owners and for the business itself?
2. Incremental vs Big Bang?
I’ve seen people take both of these options. The ‘Big Bang’ approach is to do the whole stepping-back thing in one go. For example, put a professional management team in place, look for a buy-out/in – any option that gets you and your fellow owners out of the door straight away. The incremental approach is to plan out a sequence of changes that will get the owners out of the business gradually, perhaps starting with the appointment of a professional managing director or even an ops director.
The most important thing is to match the option with your (and the other owners’) style. Look back at those times in the past when you were successful. Did you take a big-bang or an incremental approach?
I believe this is largely a question of personality traits, so you (or someone close to you) should be able to see the patterns in your behaviour. Make sure you play to your strengths.
3 Get the right people on the bus
Experience suggests that this is the time to be really fussy about the person or team you appoint. You’ll have spent a large part of your life building this business, so make sure you carefully consider who you need and invest in them accordingly. Make sure you decide on your Big Bang vs Incremental approach first, and go through the other points outlined here, before you decide on the right kind of person. Building a business is a bit like raising a child. You wouldn’t hand over your child to be looked after by the first/cheapest person you met, would you?
4. Do the Strategic Analysis
There are plenty of tools and techniques to help look at just why your business has been successful. My belief is that it’s essential that you know what has made it work, before you think about handing it over to anyone. Very often, it’s those unconscious factors, the difference that makes the difference, that have led to your success.
It can be a mistake to assume that because you did what came naturally and made your business work, that someone else will also instinctively understand and be able to continue delivering that. Do the strategic analysis, understand at a conscious level what makes your business successful and make sure that you design processes and put in place the right people and other assets to continue that.
5. Step back, but not off
One final thing that makes the whole stepping-back process work well for the owners of a business is to not feel that you have to step-back (or abdicate) entirely. If you have a continued ownership stake, it’s right that you can also (maybe even should also…) continue to have some say in the direction of the business.
You can design whatever arrangement you want, so long as you’ve done steps 1-4 above. Perhaps you’ll decide to restrict your involvement to one of appointing the right people and guiding the strategic direction of the business. Or perhaps you’ll become a kind of ‘ambassadorial’ figure, representing the business to the wider world but not doing anything else. It may be that you become ‘just’ a shareholder, with rights that are exercised only at an AGM. Just make sure that you consciously co-design the relationships and arrangements you’ll have with the people you hand over to. And if you notice that it’s not working – change it