As you prepare to sell your business, you’ll need to learn how to hand over the reins to your successor. This is especially crucial when you sell or pass on your business to family.
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Groom your successor
The better you prepare them for their new role, the more successful the handover will be.
This process works best by gradually easing you out and easing them into the business.
It rarely works if you hand over the reins in one fell swoop. The new owner is left feeling overwhelmed and ill-equipped with the necessary skills. It’s not the kind of legacy you want to leave behind.
These critical steps can help you prepare the new owner:
Document everything
This way, the new owner can run the business without you. Create manuals that outline all your operating processes.
Introduce the owner to your contacts
Early on, it’s not a good idea to tell everyone that you’re planning to step down. But some people, like your suppliers, should be kept in the loop. So, introduce the new owner to them if possible.
Let them watch you work
Your buyer needs to learn as much as they can. Continually explain why you do things a certain way and how you make decisions.
Let them make some decisions
Start letting them make some decisions with your guidance. Work together on key projects. And encourage and correct them.
Give them more responsibility
As they gain confidence and ability, give them more decisions to make. Become an advisor rather than guiding them. Let them make mistakes and show them how to fix them.
Give them total control
Encourage and empower them to run the business without you. This is one of the greatest challenges for most business owners.
Transfer assets and control
Get your assets valued by an expert before transferring them to the new owner. This way, you can get an idea of what you’ll be paid for the business if you’re selling it.
Put together a transition team to help you transfer control. These people shouldn’t be emotionally involved. Your team might include:
- Your accountant
- An attorney
- A business broker
Maintain open communication with your team and successors.
Once the new owner takes control, all decisions are theirs. And now it’s time to do the hardest part of all—walk away.
Let go
This can be harder than it sounds, especially if you built the business from scratch.
By gradually transitioning responsibilities to your successor, you have time to get used to the idea of walking away. You’ll also feel confident that you’re leaving the business in good hands.
Once you walk away, don’t continually check in or drop by. Staying away can be challenging, especially if you pass the business on to family.
(But they won’t thank you for continually dropping in, so resist the temptation to do so unless they specifically ask for help.)
Final thought
If you’re retiring, make sure you have a plan in place. How will you spend your time?
When you create and stick to a plan for your next stage, you’ll be too busy having fun to worry about what’s happening with the business!
