Thoughts about Planning your Exit Strategy
A few years ago, Brett Favre retired as the long time quarterback for the Green Bay Packers NFL football team. Apparently he wasn’t ‘prepared’ for retirement because a few months later he signed with the New York Jets. This season he joined the Minnesota Vikings and led them to the conference championship game.
When Favre went through his “I’m retired, I’m not retired” turnaround, I wrote about it, drawing an analogy between him and lots of business owners contemplating retirement. Now, at forty – he’s the oldest quarterback in football - he will soon face the same situation once again. It’s only a matter of time before he retires, voluntarily or otherwise.
You, a business owner, will someday be facing the same challenge. You’ll be asking similar questions like “How will I retire?” “When is the right time?” What will I do with the rest of my life?” And others like “What do I do with my business?” “How do I get my money out?”
Unlike Farve, whose focus is primarily personal, yours must be in three areas: Financial, Business and Personal.
One presumes that Favre is set financially. With the help of your financial and legal advisors, you are addressing this. (You are, aren’t you!?)
From a business standpoint, the management of the football team has planned for the team’s continuity. Indentifying and developing their next quarterback, along with players for other positions, is one of their responsibilities. Continuity of the team is not part of Favre’s MO.
Business continuity is a challenge you and every business owner must address to assure that you can withdraw your investment from your business to your personal investment portfolio. Whether you sell internally, to your partners, family and/or staff, or externally, to outside buyers, you need to develop an exit strategy. That strategy will determine your transition plans. To successfully implement your plans it’s important to start early. It’s a long term process.
Probably the biggest challenge, whether to Favre or to you, is the personal side. Favre is ‘only forty,’ probably with more than half his life ahead of him. But he may have no choice about when he retires – the team management may make that decision for him.
You can expect a life after ‘retirement’ of twenty years – maybe more. You have control over your timing. It’s your business. But if you hold on too long you may see your business – what you worked so hard to build – wither away, diluting your investment as it goes.
In both instances, Favre and you, the key is to rethink ‘retirement.’ It’s not the end. It’s a ‘transition’ from one life style to another. I hope that Favre, after his retirement dilemma of a few years ago, spent some productive time building his ‘new life after football’ so that he has something to move into, to look forward to. I call this “Building a boat to step into when you walk of the dock.”
What about you? It’s important to start early making personal and business decisions that weave together financial, business and personal factors to create a transition that assures a meaningful, fulfilling life, provides adequate income to live it and, if you want it, leaves a successful, ongoing business as your legacy.
It’s never too early to start planning your transition. How about today?
Tuesday, January 26, 2010
Thursday, November 5, 2009
EVALUATING YOUR POTENTIAL SUCCESSORS
A key factor in planning for your retirement (what I call your transition) is being confident that the people who will succeed you have the 'timber' (aka the ability, passion, knowledge etc.) to lead your company into the future.
Choosing and developing them is one of your challenges. It's an obligation you have to your partners, shareholders and other staff members.
If you fail, all the rest of your work in building a sustainable organization will have been wasted. You will have failed in leaving your legacy.
Many leaders and owners pick their potential successors based on erroneous assumptions about 'What it takes' to be a leader. They incorrectly assume that loyalty, longevity, good technical competence, being a family member, etc. are the best criteria to use.
That's what it takes to be a good 'Number two' - a good 'doer.' That MAY qualify then to be good managers - this is not what it takes to be a leader. There are relativly few people who can lead.
What's the difference between a good manager and a good leader? A recent article in the Wall Street Journal is a good reference.
You may have lots of good managers in your company. And you'll be lucky - or brilliant - if you have surrounded youself with several people who have leadership potential - the qualifications to lead the company after you step aside.
THE BOTTOM LINE; take a long, hard look at the people around you.
Identify those who have leadership potential and focus on grooming them. If you don't have what you need, start searching - outside your company NOW. And stop wasting your time trying to make your good managers into mediocre leaders!
Choosing and developing them is one of your challenges. It's an obligation you have to your partners, shareholders and other staff members.
If you fail, all the rest of your work in building a sustainable organization will have been wasted. You will have failed in leaving your legacy.
Many leaders and owners pick their potential successors based on erroneous assumptions about 'What it takes' to be a leader. They incorrectly assume that loyalty, longevity, good technical competence, being a family member, etc. are the best criteria to use.
That's what it takes to be a good 'Number two' - a good 'doer.' That MAY qualify then to be good managers - this is not what it takes to be a leader. There are relativly few people who can lead.
What's the difference between a good manager and a good leader? A recent article in the Wall Street Journal is a good reference.
You may have lots of good managers in your company. And you'll be lucky - or brilliant - if you have surrounded youself with several people who have leadership potential - the qualifications to lead the company after you step aside.
THE BOTTOM LINE; take a long, hard look at the people around you.
Identify those who have leadership potential and focus on grooming them. If you don't have what you need, start searching - outside your company NOW. And stop wasting your time trying to make your good managers into mediocre leaders!
Saturday, October 24, 2009
What do you owe your children?
This is question every parent has faced - especially parents who own their own business.
Do you owe them a job in the business? Do you owe them guaranteed income?
When our kids were growing up Janie, my wife and their Mom, had a phrase that became our guide: "Every pot has to set on its own bottom." In other words, our goal was teach them to be self-suffcient - to discover what their life passion was and to support them in their quest to achieve it.
In other words, the goal was to help them identify what really mattered to them and not expect them to live out some dream we may have had for them. Although I was an engineer, there was no need for them to become engineers - unless that was what they wanted to be. They didn't have to move back to Lockport, where we live - unless they wanted to. They didn't have to come back to the business - unless they wanted to. (None became engineers, none moved back home and none joined the business. That was OK for us.)
We are pleased for their personal successes - each in their own way.
Every parent needs to ask themselves what they owe their kids. This seems to be a key question for business owners when they think about their children and their business. Somehow there seems to be an unspoked assumption that the best thing for at least one of the kids is to come into the business. The business owner may see that as the step to leaving their legacy. The child may see this as a easy step to take without any deep thought about what really matters to them, what they want to accomplish with their lives. It may or may not be the best move - for the owner, for the child (who is now an adult) or the business.
Which brings me to the question "What do you owe your children?"
First, let me offer some ideas about what you don't owe them. You don't owe them a job. You don't own them a steady income. Your don't need to decide their life purpose.
You do owe them love and support while they are educating themselves - only partial if that's all you can afford. You owe them nuturing while they are growing up. You owe them a lasting set of values that will enable them to live a successful, caring life that enhances our culture.
Then you owe them the opportunity to develop self discipline and self suffciency. You owe them respect for who they are - even though it may not be what you had hoped of them.
Last, but not least, you owe them the freedom to follow their own path and to grow into supportive, caring individuals who offer the same to those around them.
After they have sorted this all out and developed clarity about their self identity, if they decide they want to join your business, the odds are that you'll have a great staff member with potential to be a future leader!
Do you owe them a job in the business? Do you owe them guaranteed income?
When our kids were growing up Janie, my wife and their Mom, had a phrase that became our guide: "Every pot has to set on its own bottom." In other words, our goal was teach them to be self-suffcient - to discover what their life passion was and to support them in their quest to achieve it.
In other words, the goal was to help them identify what really mattered to them and not expect them to live out some dream we may have had for them. Although I was an engineer, there was no need for them to become engineers - unless that was what they wanted to be. They didn't have to move back to Lockport, where we live - unless they wanted to. They didn't have to come back to the business - unless they wanted to. (None became engineers, none moved back home and none joined the business. That was OK for us.)
We are pleased for their personal successes - each in their own way.
Every parent needs to ask themselves what they owe their kids. This seems to be a key question for business owners when they think about their children and their business. Somehow there seems to be an unspoked assumption that the best thing for at least one of the kids is to come into the business. The business owner may see that as the step to leaving their legacy. The child may see this as a easy step to take without any deep thought about what really matters to them, what they want to accomplish with their lives. It may or may not be the best move - for the owner, for the child (who is now an adult) or the business.
Which brings me to the question "What do you owe your children?"
First, let me offer some ideas about what you don't owe them. You don't owe them a job. You don't own them a steady income. Your don't need to decide their life purpose.
You do owe them love and support while they are educating themselves - only partial if that's all you can afford. You owe them nuturing while they are growing up. You owe them a lasting set of values that will enable them to live a successful, caring life that enhances our culture.
Then you owe them the opportunity to develop self discipline and self suffciency. You owe them respect for who they are - even though it may not be what you had hoped of them.
Last, but not least, you owe them the freedom to follow their own path and to grow into supportive, caring individuals who offer the same to those around them.
After they have sorted this all out and developed clarity about their self identity, if they decide they want to join your business, the odds are that you'll have a great staff member with potential to be a future leader!
Wednesday, October 21, 2009
Three Important Questions Before Retirement
I've been thinking a lot about business owners considering retirement who will be selling their business. There are, to me, three key questions that every business owner needs to address for their retirement to be successful:
- Will I have the money I need to support the life I want to live after I retire? That involves money I have saved and invested, my retirement funds and the proceeds from the sale of my interest in the business.
- Have I built a strong sustainable company that will continue after I move on? Have I developed the people with the passion and the competence to lead the business and hold to the values I instilled?
- Have I chosen a meaningful life after work that I will move into? I know that successful retirement is not an ending, It's a transition into a different 'venue' - one that will give me satisfaction because I am doing something I love to do. To be successful I need to prepare for the 'Third Phase' of my life.
People who have answered these questions in a way that matches their aspirations can move on knowing that they can make a successful transition and leave a successful business as their legacy.Those who haven't are in danger of holding on too long and destroying the very business they spent their life to create.
What about you? Are your prepared for retirement? If you are in your late fifties or early sixties think long and hard about these questions as if your life depended on it. Because it does!
Wednesday, October 7, 2009
THE DAY THE LIGHTS WENT OUT.
We lost our power today - twice - and I was amazed at how that changed my work pattern.
I couldn't get on the computer - and, of course, I couldn't get on the internet. Besides that, I couldn't use the phone - and no calls came in! In other words, all of my major distractions - the activities that keep me from staying focused - were 'off the table!'
I've often suspected that I have a minor case of ADD (now called ADHD) because it's really difficult for me to work on one task for an extended period of time. I like to 'keep lots of balls in the air' and move back and forth from task to task, doing a bit on one and a bit on another, etc, throughout the day.
Having the computer and the internet and the phone available lets me flit from one activiity to another having a grand time but being frustrated that I don't get more done.
Today was different. The screen was blank, the phone was dead and I was left to working on projects in my notebook. It was a cloudy, gray day, even too dark to read. I still flitted a bit but my 'range of activity' was limited. I could only focus on what I could do in my notebook. I got a lot done!
By the time the power came back on I had made 'real progress' in several tasks that had been 'hanging over my head.' It was a very productive afternoon!
Now the question is 'What did I learn?' 'How will I do things differently, better tomorrow and the rest of the week?'
Only time will tell!
I couldn't get on the computer - and, of course, I couldn't get on the internet. Besides that, I couldn't use the phone - and no calls came in! In other words, all of my major distractions - the activities that keep me from staying focused - were 'off the table!'
I've often suspected that I have a minor case of ADD (now called ADHD) because it's really difficult for me to work on one task for an extended period of time. I like to 'keep lots of balls in the air' and move back and forth from task to task, doing a bit on one and a bit on another, etc, throughout the day.
Having the computer and the internet and the phone available lets me flit from one activiity to another having a grand time but being frustrated that I don't get more done.
Today was different. The screen was blank, the phone was dead and I was left to working on projects in my notebook. It was a cloudy, gray day, even too dark to read. I still flitted a bit but my 'range of activity' was limited. I could only focus on what I could do in my notebook. I got a lot done!
By the time the power came back on I had made 'real progress' in several tasks that had been 'hanging over my head.' It was a very productive afternoon!
Now the question is 'What did I learn?' 'How will I do things differently, better tomorrow and the rest of the week?'
Only time will tell!
Saturday, October 3, 2009
DISCOVERING COMMON GROUND
Yesterday, I made a presentation on business succession planning at the Niagara EXPO and the conversation with the group was facinating!
The conversation focused on the three elements of successful succession: Financial, Organizational and Personal transition. My beginning mindset was on business leaders and business owners contemplating retirement.
But the majority of people in the room were not business leaders or business owners! They were middle managers and even a couple of folks just out of college who were a long ways from retirement. So I 'fine tuned' the presentation to fit their interests and backgounds.
I had a similar experience a few weeks ago when I presented to a group of financial planners. I started talking about business owners and discovered that many in the room had shifted their 'take' on the presentation to their personal situations!
The neat thing about both experiences was that the three part focus: financial, organization and personal resonated with both groups! I discovered that no matter where a person is in their life, when they step back to gain a perspective, they have concerns/interests in all three areas.
They discover that they need to think about where they are and where they want to go - and then make 'life adjustments' to get themselves on track to live a live that will be rewarding and fulfilling to them. They must live their lives by their standards and values, not someone else's.
So I'll keep my three part focus but expand my perspective to a wider range of people including business leaders and owners and others, too.
The conversation focused on the three elements of successful succession: Financial, Organizational and Personal transition. My beginning mindset was on business leaders and business owners contemplating retirement.
But the majority of people in the room were not business leaders or business owners! They were middle managers and even a couple of folks just out of college who were a long ways from retirement. So I 'fine tuned' the presentation to fit their interests and backgounds.
I had a similar experience a few weeks ago when I presented to a group of financial planners. I started talking about business owners and discovered that many in the room had shifted their 'take' on the presentation to their personal situations!
The neat thing about both experiences was that the three part focus: financial, organization and personal resonated with both groups! I discovered that no matter where a person is in their life, when they step back to gain a perspective, they have concerns/interests in all three areas.
They discover that they need to think about where they are and where they want to go - and then make 'life adjustments' to get themselves on track to live a live that will be rewarding and fulfilling to them. They must live their lives by their standards and values, not someone else's.
So I'll keep my three part focus but expand my perspective to a wider range of people including business leaders and owners and others, too.
Monday, September 28, 2009
YOU HAVE TO LET GO TO WIN
A few days ago the Gallup Organization published the results of an eight month survey that showed that business owners have the highest overall well-being of any occupation group – followed closely by Professionals and Managers/Executives.
Another article, published immediately after the Gallup publication, said the findings ‘reflect the importance of being able to choose the work you do and how you do it. The way you manage your time, and the way you respond to adversity.”
In other words, business owners and, to a slightly lesser extent, professionals and managers/executives, derive greater ‘psychic income’- emotional satisfaction – from their work than most other groups.
It's no wonder they don’t give much thought to retirement – what they will do in the ‘third phase’ of their lives. I hear comments like: “I’m happy doing what I’m doing,” “I just going to keep on doing it,” “I’m not ready,” “The company isn’t ready,” etc.
Thinking about making their transition requires them to take time from what they enjoy (love!) doing – so the put it off ‘til later, ‘when I’ve got time.’
The downside is that they are in danger of suffocating their business – the very thing that the have spent their life building!
They run out of personal energy and ideas, the company loses its competitive edge and the best of the next generation, the potential future leadership, seeing no opportunity for growth, move on while the mediocre hang and ‘settle in.’ Slowly, the business ‘dies in the vine’ and the leader’s lifetime investment is squandered.
Every business leader – to assure a successful transition needs to ask – and answer – questions in three key areas:
FINANCIAL - How will I transfer my wealth out of the business into my personal portfolio?
ORGANIZATIONAL - How will I create my legacy – a strong, sustainable company that will thrive after I retire?
PERSONAL - How will I build a meaningful ‘third phase’ of my life – something I am looking forward to after I retire?
Doing all this takes time – time to transfer your wealth, time to build your organization and develop the people to lead it, and time to create your new life. Waiting too long can limit, even destroy your ability to make a successful transition.
No matter how much you love what you are doing now, it’s essential to start planning early. When is the right time? It all depends on your specific circumstances. The key is to start early rather than late. Start too late and you can lose every thing you built – and end up ‘lost in the wilderness.’
Another article, published immediately after the Gallup publication, said the findings ‘reflect the importance of being able to choose the work you do and how you do it. The way you manage your time, and the way you respond to adversity.”
In other words, business owners and, to a slightly lesser extent, professionals and managers/executives, derive greater ‘psychic income’- emotional satisfaction – from their work than most other groups.
It's no wonder they don’t give much thought to retirement – what they will do in the ‘third phase’ of their lives. I hear comments like: “I’m happy doing what I’m doing,” “I just going to keep on doing it,” “I’m not ready,” “The company isn’t ready,” etc.
Thinking about making their transition requires them to take time from what they enjoy (love!) doing – so the put it off ‘til later, ‘when I’ve got time.’
The downside is that they are in danger of suffocating their business – the very thing that the have spent their life building!
They run out of personal energy and ideas, the company loses its competitive edge and the best of the next generation, the potential future leadership, seeing no opportunity for growth, move on while the mediocre hang and ‘settle in.’ Slowly, the business ‘dies in the vine’ and the leader’s lifetime investment is squandered.
Every business leader – to assure a successful transition needs to ask – and answer – questions in three key areas:
FINANCIAL - How will I transfer my wealth out of the business into my personal portfolio?
ORGANIZATIONAL - How will I create my legacy – a strong, sustainable company that will thrive after I retire?
PERSONAL - How will I build a meaningful ‘third phase’ of my life – something I am looking forward to after I retire?
Doing all this takes time – time to transfer your wealth, time to build your organization and develop the people to lead it, and time to create your new life. Waiting too long can limit, even destroy your ability to make a successful transition.
No matter how much you love what you are doing now, it’s essential to start planning early. When is the right time? It all depends on your specific circumstances. The key is to start early rather than late. Start too late and you can lose every thing you built – and end up ‘lost in the wilderness.’
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