Often small business leaders find it difficult to imagine anyone else running their company. That’s not because it’s some sort of rocket science (although, if your business is in rocket science, kudos) – it’s just a natural human tendency to imagine ourselves as indispensable.
That’s why, for many small business owners, their succession or exit plan consists of selling the business on to a younger version of themselves or bringing in a carbon copy CEO.
In fact, it’s very hard to successfully recruit and retain top-level leaders in small companies. Often, there simply isn’t the skill or expertise to find, recruit and nurture the right person. In addition, the salary budget is unlikely to stretch to a level that will entice anyone with a lot of formal training and expertise. Instead, the recruitment process becomes a personal quest for the holy grail of a younger version of the current business owner. And even if the right candidate is found, it’s a real challenge for someone to integrate into a small business in the most senior position. The scrutiny a new leader is subject to from all stakeholders (especially employees) can be daunting. Don’t forget, in a small business, many of the employees will most likely be long-standing, loyal friends of the previous leader and/or possibly after the top job themselves!
In my experience, bringing in an outside person as a direct replacement for the current leader is very hard to achieve. If you’re a small business owner thinking about succession planning, you’ll do better to consider alternative approaches, such as promoting from within and retaining some leadership responsibility yourself.
Consider the qualities that you think make a great leader. Perhaps start by looking at the aspects of your leadership style that have made your business a success. Think about the professional knowledge and skills that will be needed to take the business to the next level in the coming years. Also consider the attitudes and personality attributes that make a great leader. Is there someone in your company who fits that profile, or has the potential to in the future? If there’s no one shining star, consider a small pool of people who might make a great management team.
When you’re ready to step down, I recommend retaining some sort of leadership role in the business – so, stepping back slightly, rather than retiring altogether. The new leader or leadership team can hopefully pick up more of the day-to-day hassles that you don’t enjoy, and you can maintain more of a big-picture role. The business will then continue to benefit from your expertise and leadership skills, and you benefit from maintaining an ongoing (professional and financial) interest in the business.
Hopefully you see potential among your current employees to step up and support you in your new (nominal) leadership position. If so, a succession planning route like ISOP may be ideal for you and your company.
This post is based on an extract of my book Do More of What You Love: The New Approach to Business Succession Planning, out now.