A very common comment I hear from owners of businesses when I asked them about progress towards thinking about succession planning is this:
“I just need to sort out X before I can start thinking about Y.”
When working towards a significant change, such as the sale of the business, it is important for the business to multi-task; to deal with certain issues concurrently.
There are four particular dangers of focusing on one major issue at a time.
Do you recognise any of these?
The Bump In The Lino Effect
Sorting out a problem in one area can often give rise to another. Like the proverbial bump in the lino – when you push it down another bump appears somewhere else – it can be better to deal with several issues at once.
As an example, take a company with some structural issues that need addressing. Perhaps there are loans in place or a minority shareholder. Perhaps there are separate share classes. It is a good idea to simplify such matters in advance of getting the business ready for a potential sale.
In solving this problem, however, another problem may be created. For example, a leadership team who, aware of the structural changes taking place, might begin to develop expectations of ownership. These could have been dealt with when the restructure was being looked at but might become too entrenched to look at later.
The Time Taken
Some of the changes that are required can take some time, especially when looking at the business continuing, perhaps via an Employee Ownership Trust (EOT). We recommend that the cultural changes to engender employee engagement should need at least 18 months to fully bed in.
If the other changes to the business also take 18 months to sort out, and one does not start until the other is finished, then this means it will be three years until the business might be ready to be sold.
Employees are smart. They have a sense when something is up. They talk to each other, often in an uninformed way, and can, therefore, reach inaccurate judgements.
Suppose, for example, an owner wants to sell to an EOT. Perhaps they do a lot of work on employee engagement, but do not take time to think about their own purpose and future.
When the day of the sale comes and the owner continues to act as managing director, employees who feel they were told that they would be in control may now feel that nothing has really changed.
Struggling To Let Go
The preparation needed for a business to be sold to an EOT often focuses on employee engagement. A common phrase is that employees should “step up”.
Of equal if not greater importance, however, is that of the owner letting go. Employees will not step up unless there is somewhere to step up onto.
Letting go and taking control are two sides of the same coin, that need to be worked on in tandem. For example, by working on the purpose of the business (what we call ‘The Flag’) so that everyone understands why the business exists.
Conclusion – The Eternal Pyramid
The Eternal Business Programme provides a pathway for businesses who wish to sell their business to get a fair value and to leave the business as a legacy.
There are four parts to the business model, which we call the Eternal Pyramid. Crucially, the programme provides a pathway which enables owners to work on the four parts to this permit at the same time.
By following a programme like this, owners and leadership teams can be guided through a process which ensures they multi-task and don’t get bogged down by focussing on only one issue at a time.