We haven’t covered this much, mostly because many of you haven’t reached that one-to-two million dollar mark yet (keyword, YET!). That’s the size of business that we’re really talking about here, but this situation can apply to any size service business. With that in mind, have you looked at succession? Or selling? Or part-time retirement? Really what it comes down to is, have you focused on building a sustainable business that can ultimately function the same without you?
Charles Schwab and Steve Jobs are great examples of this. Here are two guys who built massive companies, but when they left things began to fall apart. They both had to come back to their businesses because they didn’t “install” within the company the core culture of their leadership. Yeah, they were great leaders (in their own ways), but they had to be physically there for things to stay on track. They didn’t realize that they had essentially failed to pass along their leadership skills and expectations to the people taking over.
For you, the service professional who has built a profitable business with 20 or so employees, you’re likely already in a managerial position or even onto the entrepreneurial visionary position. You’re no longer a technician (unless there’s a rare occasion where you want to be). At this point, you’re focused on figuring out the future of the business that you love. Hopefully, your employees are doing things the way you want them to be done, with only minor corrections here and there.
What so many business owners don’t realize at this point, is that their leadership is still just as important as ever, even if they aren’t directly managing all of the employees or even the day-to-day operations anymore. The business can’t function if it’s “headless”, so you must make sure that the business will not be headless when you leave.
You can leave and put someone else in charge of the operations, while you still collect dividends, or you can retire part-time and show up occasionally to help with the guidance of the business. For those less interested in staying involved in some way, you can set the business up to be sold. So, how do you approach these situations?
Read the books “Good to Great” and “Built to Last” by Jim Collins. These books will give you the proper mindset for the next steps. One of the key points that Collins brings up is the concept of “level 5 leadership”.
What does that mean? Well, Collins starts out with level one leadership, which is your typical example-based leadership style. This person does the same work as the people under them. It’s easy to get stuck at this level, and many business owners actually enjoy doing those basic tasks. You can’t grow a successful business at this level of leadership though. Do the CEO’s of Google and Microsoft go around doing rudimentary tasks? No, they don’t. The business as a whole relies on them to do things far beyond that.
We’ll skip ahead to level 5, but to learn more about levels 2, 3 and 4, either read the book or check out the video at the bottom of this post. A level 5 leader is someone who has an immeasurable amount of humility and steadfast resolve. They’re able to get stuff done not just because people love them or want to follow them, but because they don’t accept anything else. They make sure to hire the right people for the right jobs. Yeah, this is a lot harder than it sounds!
What all of this really comes down to is… it’s all about YOU, the business owner. Can you self-reflect? Can you take criticism? Can you look for mentors or coaches who will look you in the face and tell you the hard truth? Ultimately, can you set aside your ego? Maybe you aren’t the person who can single-handedly take your business to where you want to go.
So, who can you trust in your business without question? If the answer is nobody, then you need to start looking for people that you can put around yourself to help build you up. It’s not easy and it takes time, especially to build that trust, but it’s a journey that you have to get started on as soon as possible if you want to get where you’re going and you know that you can’t do it alone.
You have a few options with succession planning. You can keep on doing the business until you die, and then the business will just implode. Or, you can keep going until you retire and then let the business implode. However, neither of those are doing anybody any favors. Have you thought about finding someone to replace you? Someone who you not only trust but someone who is fully capable of running the business with you not there? Or, setting up your business so that you can sell it to an investor? Most people these days don’t want to buy a business and have to do all of the work still. They’re looking for an investment. They’re looking for a business that has been carefully structured in a way where people are in place to run it, and all that’s needed from the owner is occasional feedback or guidance.
Three things to wrap this up:
- Start planning early. Set goals, put things in place, and start really learning how to see those signs that aspects of your business are still too reliant on you individually.
- The biggest change you’re going to make during this process is you. Your mindset. Your ambition. Your perspective.
- Self-criticism. Are you able to look at yourself in the mirror and see the shortcomings that you have and work on them? Your personal shortcomings shouldn’t be the limiting factor when you’re headed towards your goals. Look for people to supplement your qualities.
For those interested in hearing more, check out this video below.