There’s a term that is bandied about in the world of family business consulting. It’s called the rising generation.
This means the group who’s going to be moving into leadership positions in wealthy families. I often use the term when I’m talking about the next generation of business owners for a privately held company.
There's a term that's bandied about in the world of family business consulting, it's called the rising generation.
This means the group who's going to be moving into leadership positions in wealthy families. You know, I often use the term when I'm talking about the next generation of business owners for a privately-held company.
I know that for many business owners having a successful transition at the end of their business career is an important thing. I also know that too often those who want that transition start way too late.
And you know, when those owners who started late want to leave their business too often they find it's too late to get a successful transition done, and they should have started years ago.
So, when this happens sometimes those owners feel desperate. Sometimes they end up having to leave their business under really unhappy circumstances.
I don't want you to get the sale you want, I want you to get it when you want, in the way you want. I want you to have a transition that you want. You may not have dreamed about your transition, and I bet there will be a time in your life when a transition becomes really, really important.
You know, I've seen too many business owners who started late and had outcomes they weren't happy about. So, when you follow the success path of a sale-ready company the chance becomes small that you won't be able to transfer your business in a manner that you'll find satisfactory.
So, let's talk about a scenario where things didn't work out all that well.
So, I had a subcontractor I was working with, and really nice guy. He had a great business. He had a really good team of young managers underneath him. And I would ask him from time to time and say, "Are you ready to start the transition process?" And he'd always say no to me. Then I'd go back a couple months later and I'd say, "Are you ready to start the transition process?" 'Cause I knew he was two or three years away from leaving his business.
He had talked about moving out of Vermont down to the South. Now, I know that it takes a while for these transitions to work out well, but he kept putting it off, and putting it off, and putting it off. And finally, about three months before he really wanted the change he called me up and said, "Josh, I'm ready to start." Well, I said, "We can do the best we can." Unfortunately, it turned out really, really poorly.
And the reason it turned out really, really poorly was because of the late start, the lack of trust that he had with his people. They went out and hired an attorney who was a deal-killing attorney not a deal-making attorney, and the whole thing fell apart.
He ended up liquidating the business, never selling it, getting much, much, much less than he could've had or wanted to get. It didn't hurt his ultimate financial stability, but it was not a fun activity for him.
So, now let's talk about a scenario that worked better than anyone thought possible.
In this subcontracting company what happened was we started four years early getting the rising generation, meaning the son of the owner ready to take over the company. Now, the big problem we had was that he would think like an employee and not like an owner. It took us several years to get him to develop that owner mentality.
It would've taken at least a year or two to get the managers for the subcontractor that didn't work out well to get an owner mentality. So, by starting early and by creating an economically-sustainable business for this child to buy we had an exceptionally successful transfer.
You know, the truth is there are way too many companies that start late, and I don't want you to be one of them.
You know, if you look at the landscape of how to transition out of your business and you decide there's something you need to do about it, start with these simple steps.
Number one, identify who are the likely new owners of your business. This is a really important step. You have to identify the people or the companies that might end up buying you.
Number two, talk with us about what type of conversation you would have with these people. There's a specific type of conversation you want to have, and there are specific things you'd want to say. But I need to have a conversation with you to tell what you should be saying to your people.
And number three, and this is really important, start early with the process of getting your next owners ready for ownership.
So, when you take these steps you're starting down the path of having a business transfer that will serve you and your next owners.
So, I would love to have a conversation with you about this internal transfer strategy, so feel free contacting me at email@example.com to set up a time for us to talk.
So, in the meantime if you're not ready to talk, download our free infographic on "The Sale Ready Company." You'll learn what the success path for a successful business transition is, and why you need to pay attention to each step along the way.
And while you're at it scroll down and let me know what you think about starting your transfer strategy earlier rather than later.
Hey, this is Josh Patrick. You're at the Sustainable Business. Thanks a lot for stopping by. I hope to see you back here really soon.