How to Encourage a Business Owner to Exit

Find the Right Words to Not Offend Owners

How to Encourage a Business Owner to ExitIn family businesses it can be obvious to everyone but the owner when it is time for their exit. When that departure is past due, the indicators usually include the owner’s clear differences with staff’s recommendations for business innovation, process change and new technology implementation.

Their own resistance may come as an attempt to ignore the fact that their sense of purpose and usefulness has diminished in the company and they are not as needed as they used to be in the past. Unfortunately, some owners are simply not even aware of their reduced capacity, yet incorrectly believe they are still the right champion for the company. Although the signs are obvious and the resistance is obvious, it’s time for change and someone needs to help the owner see the reality.

In every business destined to carry on without the owner, there comes a time when succession should happen. Change in leadership or ownership is a natural part of business evolution and timing is key. Unfortunately the benefits of timeliness go out the window when an owner is oblivious.

The challenge for the family and management team is positively encouraging succession. The task can be easier for staff members who are outside the family.  The task is far more difficult for those employees who are family members because they are connected in more ways than just the business. So how do you avoid ruining Thanksgiving dinner yet still encourage Dad to leave his business and move on to a more relaxed lifestyle? Carefully.

It is natural to want to avoid the frustration and anger that often lead to saying the wrong thing. Yet, as tension builds with each day, month or year, it is difficult to manage emotions and refrain from shouting out what seems obvious. Resentment builds when family members and the management team see the need but aren’t given the capacity to take the reins.

Before talking with owners who are oblivious, it is imperative to understand what is behind their resistance. Are they just not seeing the big picture?  Do they have issues with control or letting go of power?  Is there fear behind handing the company over?  Have they neglected to create their own personal exit strategy?

The reason(s) for their lack of movement or change need(s) to be understood so that family and management can develop the right discussions. If the owner’s reasons for delay are personal, personal conversations are most effective; whereas if the rationale is business based, good communication should be business focused. Help, support or resources should also be suggested in line with the owner’s reasons for delaying their exit.

Schedule these conversations in advance to help avoid reactive comments people wish they had not said. Plan a structured one-on-one meeting where an agenda is developed and shared ahead of time. The one-on-one approach is preferable so the owner doesn’t feel ganged up on, defensive or attacked.

Once the meeting is set, plan to present the problem by finding the right words to help the owner hear what is really needed. The best strategy, whether presented by family or management, is to balance concern with supportive options:

Family Dad, I didn’t think you wanted to work so much at this age.  What could we do to help you free up some of your time?
Management Bob, I know you feel young but you are working too hard and it seems other staff could be doing some of the tasks.  Which ones should we look at handing off?

 

Although you have identified the problem as you see it, the owner may neither feel there is a problem nor agree with you. By combining the issue with their individual needs, there will be more openness to contributing to the discussion. If there is resistance, or what family members call stubbornness, then more assertion may be needed.

Family Dad, I am concerned for your health and don’t want to see you shorten your retirement years.  Can we talk about a plan so you can work less, stay healthy and play more?
Management Bob, the plan has always been for your retirement to start in _____ and now is the time to make concrete plans.  When shall we schedule a meeting to discuss some options?

 

With these messages there is clarity of the problem and an option for establishing solutions. Expect push back and delays as some people need time to process things after the seed is planted. If this is the case, revisit the topic three to four days later:

Family Dad, I have put together some ideas to help you have more free time.  Is now a good time to look at them?
Management Bob, we have done some research to find a great transition coach to work with our team.  Would you like to hear about the potential candidates we think might fit?

 

The owner may actually want to exit, but might be unsure of the process in getting from point A to point B. In this case, the reluctance is usually due to a lack of a personal plan and therefore lack of a succession plan for the business. This is when neutral, unbiased and non-judgemental exit professionals can bridge the gap. Much work can be done when there are no ties, genetics or alliances to get in the way of transitioning a business owner out of the business he or she built. Remember, the business is their baby and it’s hard for anyone let go.  Check out our Exit Success Program or Contact us at pam@strategytoexit.com or 604-349-8660 to discuss how we can help you move forward.

This entry was posted by Pam Paquet and is filed under Business Owners, Exit Strategies. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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