Letting Go and Delegating Control
2/22/2024 - Transition Your Business | Small Business Resources
There could be any number of reasons you’re leaving your business. You might be selling it, or you could be handing it over to family or key employees to run as you step down. Regardless of why you’re letting go, learning to delegate control and then letting go of the reins entirely is especially important if you’re selling to family or passing the business on to them.
One of the first things to determine is when you’re going to leave. Have this worked out well in advance, and consider factors like family, finances, your health, and the state of the industry you’re in. Document everything so the new owner can run the business without you. Create manuals that outline all your operating processes. Remember – this should be a smooth transition and the new business owner should be able to pick up where you left off.
Although it might not be a good idea for everyone to know you’re planning to step down, there are some people who should be kept in the loop, such as suppliers. Introduce the new owner to them if possible.
If you’re selling to employees, whether it’s a favored manager, a group of employees, or a set of shareholders, it’s important that everyone is aware early on of your intentions.
In either case, there are some critical steps you need to take to prepare the new owner:
One of the first things to determine is when you’re going to leave. Have this worked out well in advance, and consider factors like family, finances, your health, and the state of the industry you’re in. Document everything so the new owner can run the business without you. Create manuals that outline all your operating processes. Remember – this should be a smooth transition and the new business owner should be able to pick up where you left off.
Although it might not be a good idea for everyone to know you’re planning to step down, there are some people who should be kept in the loop, such as suppliers. Introduce the new owner to them if possible.
Grooming Your Successor
The better you prepare them for their new role, the more successful the handover will be. How you go about it depends on who the new owner will be. For instance, if you’re handing the business over to a family member, make sure they possess the necessary skills and a genuine desire to run the business. You want to be sure they’re in it for the long haul.If you’re selling to employees, whether it’s a favored manager, a group of employees, or a set of shareholders, it’s important that everyone is aware early on of your intentions.
In either case, there are some critical steps you need to take to prepare the new owner:
Prepare the New Owner with These Steps
- Let them watch you work. They need to learn as much as they can. Continually explain why you do things a certain way and how you make decisions.
- Encourage them to get their feet wet. Let them make some decisions with your guidance. Work together on key projects. Encourage and correct them.
- Slowly delegate decision making. As they gain confidence and ability, allow them to make more decisions on their own. Allow them to leverage you as an advisor rather than guiding and making decisions for them. Let them make mistakes and show them how to fix them. It’s the only way they’ll learn to deal with failure.
- Give them total control. Encourage and empower them so they are truly ready to run the business without you. This is one of the greatest challenges for most business owners.
As you’ll see, this process works by gradually easing you out as they ease in. Following these steps is essential for successfully delegating control. Handing over the reins in one fell swoop almost never works; this leaves the new owner feeling overwhelmed because they lack the necessary skills, and you walk away knowing you’ve left your business in the hands of someone who doesn’t know what they’re doing. It’s not the kind of legacy you want to leave behind.
If you’re retiring from work altogether, make sure you have a plan in place. When you make the decision to sell or step down, decide what you’re going to do with your days instead. Just because you’re no longer going to work doesn’t mean spending your retirement in front of the television. Decide what you’re going to do with the next stage of your life and immerse yourself in new hobbies – you might even find you’re too busy to worry about what’s happening with the business.
SouthState is proud to support the small businesses in our local communities. We provide a robust suite of products and services tailored to small businesses so you can operate at maximum efficiency. No matter where you are on your entrepreneurial journey, we’re here to help you focus on the next best step for your business.
Transferring Assets and Control
When you’re transferring your assets to the new owner, get them professionally appraised so you can get an idea of what you’ll be paid for the business, if you’re selling it. Put together a transition team who will help you transfer control. They should be people who are not emotionally involved, like your accountant, solicitor, or business broker. Maintain open communication with your team and your successors. Once the new owner has taken control, all decisions are theirs. And now it’s time to do the hardest part of all – walk away.Letting Go
Believe it or not, this can be harder than it sounds – especially if you’ve built the business from scratch, worked tirelessly, and watched it become successful due to your sweat and diligence. If you’re passing it on to family, or to employees, the process of letting go becomes easier if you follow the steps above, since it’s a gradual process and gives you time to get used to the idea. You’ll also feel confident that you’re leaving the business in good hands.If you’re retiring from work altogether, make sure you have a plan in place. When you make the decision to sell or step down, decide what you’re going to do with your days instead. Just because you’re no longer going to work doesn’t mean spending your retirement in front of the television. Decide what you’re going to do with the next stage of your life and immerse yourself in new hobbies – you might even find you’re too busy to worry about what’s happening with the business.
SouthState is proud to support the small businesses in our local communities. We provide a robust suite of products and services tailored to small businesses so you can operate at maximum efficiency. No matter where you are on your entrepreneurial journey, we’re here to help you focus on the next best step for your business.
