How to Walk Away From Your Business…and still collect a paycheck!

Most business owners invest a tremendous number of hours in their business. From the day to day activities to making high level strategic decisions, there is never a shortage of work to be done. So how can you possibly walk away and still collect a paycheck? The more responsibility your management team takes on, the less you have to do. Of course giving your leaders more responsibility requires that you have highly capable leaders with enough capacity to take on more. And while it’s true that those leaders can free you up, you also have to be willing to let go. If this sounds enticing to you, read on!

Strengthening your management team

Assess them!

Whether you do a formal assessment or a back of the napkin look at your team, you need to be honest with yourself about what you’ve got. You need to evaluate their competencies, skills, attitudes, and the key behaviors against what it takes to make your company profitable. Do they have it? If so, are you using it? It’s amazing to me how often I find a highly talented underutilized resource doing 1/10^th what they are capable of! What roles and responsibilities can you give them that will maximize their effectiveness?

If your team doesn’t have enough of what you need, where are the gaps? You know what it takes to run your business – you’ve been doing it for years! You know the gaps that would show up if you took an extended vacation. Can you develop your employees and close those gaps? Could they be capable one day?

Hire or Develop?

My experience is that in most business owners are loathe to let anyone go who has been a good loyal employee, even if they don’t have what it takes to contribute more to your business. And unfortunately, most owners don’t have a budget to add more employees to their payroll to round out the gaps. They need a manager who can take on more. These are tough calls and there is no right answer. If you think you’ve got employees who have the potential to grow into a key management role, the investment in developing them is well worth it! If not, your loyalty may stand in the way of your ability to step away from the day to day.

Let’s plan to work with what you’ve got.

Build Bench Strength

When I talk to owners about building bench strength, I usually hear something about how they want to send their employees to training, but … ‘they can’t free up the time, or it’s too expensive, or I can’t find the right training, etc..’ Training can be highly effective for development, but it’s not the only approach. Why not consider how much they will learn through immersing them in broadening experiences. For example, send your key employee to spend a day or two with a non-competitive similar agency. The exposure to other work processes, culture, and methodology can be incredibly enlightening and pay tremendous dividends. Or give them a special project that forces them to engage with your business differently. Or support their participation on well-respected local or national non-profit board, or encourage them to apply for a seat in a Chamber of Commerce Leadership Program. All of these are powerful broadening experiences that will benefit your employee and your business. Of course, you must ensure they have a clear set of objectives and outcomes going in to these experiences, and you’ll want to debrief with them afterwards to make sure they get the learning you expected.

When you think about developing your people in this way, they will seize opportunities that you may not even know existed and reach potential you may never have recognized in them.

Let go.

So you did it! You developed your employees and they are doing a great job! Now it’s time to let go. You need to give them enough space to do what they are capable of doing. It doesn’t mean you abdicate responsibility, but it doesn’t mean that you tighten your grip, either. Will they make mistakes? Absolutely! Should you set up boundaries so the mistakes are not a catastrophe for the business? Absolutely! So what will it take for you to release a little bit? Maybe it’s up front meetings to discuss strategies and plans? Maybe it’s agreeing upon a set of boundaries or criteria -- within which they can make a decision -- and outside of which they need to involve you. Just be aware of a natural tendency you may have to negatively judge any action or decision they recommend, just because it’s different than yours. Your job is to help them learn, and to learn from them! They just might have a better idea!

Enjoy Baja … or Tahiti… or your house at the beach.

You’ve done well. Your business remains profitable – or maybe has become even more profitable. Your management team is running the show. You can check in periodically, give them a pat on the back, and maybe eventually, they’ll become your new owner.

Who Will Care For Your Baby?

So, you know you need to plan for your succession…eventually… even if you don’t plan to retire anytime soon. Where to begin? Start with an assessment of your current strategy, goals, culture and key people. This will clarify the gaps you need to close, and set the roadmap for your direction over the next couple of years. It’s also a great starting point for identifying the people you will entrust to carry your company forward, profitably and sustainably. (who will care for your baby?)

Your goals and strategy assessment will help you understand what needs to be done, your key people assessment will help you figure out what particular competencies, skills and experiences you have to work with and whether they will be sufficient to deliver your strategic plan. Your culture assessment will clarify the framework within which your business functions today. A strong and effective culture facilitates growth, profit and sustainability. A negative or toxic culture creates instability, poor productivity and high turnover.

The key questions you want to answer are:

• Will your current strategies be sufficient to deliver the business valuation you need to fund your retirement, meet your personal financial goals or achieve your business objectives?
• Can your management team deliver the strategy and goals – without your week to week involvement? If not, what will it take to prepare them to do so?
• Does your current culture support stability and growth? Management and ownership transitions create stress on the business. Will your culture support these changes or hamper them?

If your strategies are insufficient, get the right people in a room and rework them. If you don’t have defined strategies, get the right people in a room and define them.

If your management team cannot deliver the strategies and goals, without you, you’ll either need to change the strategies and goals, develop your management team so they can deliver them, or hire new people who can be more effective at implementing those strategies.

It gets particularly tricky when you take yourself out of the equation. For instance, if you are the primary salesperson and your post-succession strategy relies heavily on sales growth, you will need to develop or hire somebody to close that gap.

Your task then will be to assess your high-potential and top performers to see what competencies and experiences they bring and whether they might be able to fill the identified needs, now or in the future. Just remember, this is a long term process. It takes time to develop people. It takes time to hire and onboard new people, no matter how talented they are. Give yourself the time by starting early.

If your culture is negative or toxic, you need to understand the underlying reasons and proactively address them. Changing the culture takes a concerted and intentional effort, and it may require taking a bold stand for the behaviors you want, and a bolder stand to end the acceptance of behaviors that no longer serve your organization.

Here are a few other things to keep in mind as you’re starting to evaluate your employees for future leadership:

• Attitude matters. A lot. You can train skills, but it’s much harder to train attitude.
• Culture counts, too. If your culture is productive, hire people who fit that culture. For example, a deliberate, measured leader would likely struggle heading a fast-paced, ultra-driven company. Likewise, a task-oriented leader might struggle in a relationship-oriented business.
• The role of the CEO includes three main buckets: leading strategy and vision; developing people; and being the organization’s external face. This could include high level sales calls, vendor contract negotiations, forming strategic alliances, etc. Who is prepared to play those roles in your organization?

Beware of a few common pitfalls. CEO’s are optimists. That motivates them to find a way to be successful against the odds. It also can cause them to have a rose-colored view of their employee’s capabilities or potential, or expect the employee can grow more quickly than is possible in the time the CEOs have to train them. When hiring, they may put all of their hopes and dreams into a candidate who may not be able to live up to the billing. Not only can this set the new hire up for failure, but it also can create turmoil among longtime employees in the organization, some of whom may have designs on a top job themselves.

Finally, and I know I’ve mentioned this many times before, beware of not getting started early enough. The timeline to do this well is measured in years, not days, weeks or months. Start now to position your managers to do their jobs well.

Forever Isn’t Really Forever

“They’re going to have to carry me out on a stretcher.” You wouldn’t believe the number of times I’ve heard this from business owners. And once they make a decision to never retire – or to retire at 75, 80 or beyond – they set it in stone.

Because they plan to stay in their business practically forever, these owners don’t do any planning.

But forever isn’t really forever. It’s only for their lifetimes. By refusing to plan for the inevitable, owners don’t put in place the structures that their spouses, children and employees will need when “forever” comes to pass.

Don’t get me wrong – I think it’s perfectly OK to choose to keep working until you’re in your mid-70s or even mid-80s, if you love what you do and your health allows.

You’d be in good company. According to the U.S. Small Business Administration, small business owners report that they plan to retire, on average, at age 72.6. That’s significantly longer than employees, who plan to retire at 68.4.

And just 11 percent plan to fully retire. In a Gallup poll, 40 percent of small-business owners say they will continue to work as long as their health allows them to do so, and another 47 percent say they plan to eventually cut back on their workloads but maintain their involvement in their businesses.

More power to them. But at the same time, that doesn’t mean they should put on hold any of the planning efforts it takes to get their companies and people ready for their eventual exit. Since most transition plans take three to five years, if not 10, to execute, planning ahead is the responsible way to govern the business that owners have devoted their lives to.

And you never know. Maybe the business climate will change and it’s just not fun anymore. Maybe your spouse will finally talk you into making time for travel. Maybe you will just get mentally tired and decide to move on. Laying the groundwork early gives you the flexibility to dive into the next adventure in your life.