the importance of exit planning for business owners

As I write this in early June 2020, I am getting an increasing number of enquiries about succession planning. It seems that business owners are coming out the other side of lockdown, and are thinking about their future again.

The first steps, however, are crucial. In this blog, I’d like to explain why it is so important that one of the first steps is to clarify the purpose of the business, what we refer to as the Flag.

School Governor

When my kids were at junior school, I became a school governor. The experience taught me a crucial lesson about what is the right approach to getting involved with teams and organisations.

At the time, the school had excellent reports from OFSTED (indeed, it still does). I had noticed, however, that a lot of Parents complained and were unhappy.

After just a couple of governors’ meetings, I quickly realised that the school was being run extremely efficiently. How, then, could there be such a disconnect between the reality and perception of parents?

My Agenda

I, therefore, decided that my ‘thing’ as a school governor would be to improve communication. If we can only help clients to see how good the school was, the moans and complaining among parents would surely die away.

The trouble was the leadership team of the school did not see it that way. What I felt was showing off the school in a good light, they felt were governors and parents interfering and poking their nose in.

The Lesson

Looking back, I realise that by mistake was in approaching the role of governor with my own agenda.

There are many excellent training courses for new governors. I recall one of the trainers advising us “If you want to be a governor, and you have spare time on your hands to help the leadership team achieve its purpose, you will find it fulfilling. If you want to be a governor because you have your own issues that you wish to address, you will find it frustrating. “

Importance Of The Flag

Succession planning, especially where the business continues (such as the sale to an EOT) is all about the transference of control from the owner first to the leadership team, then to the employees as a whole.

There is, however, a danger that some employees see this as their chance to ‘take over’, to get things done they always wanted to get done. In other words, to approach the exercise with their own agenda.

To prevent the various teams that are needed (board, leadership team, trustees, employee forum) but full of people with their own agenda, clarity of the purpose of the organisation is key.

At the Eternal Business Consultancy, we call this the Flag; it is the flag in the ground around which everyone gathers or the flag at the front of the army as it goes into battle. It’s what everybody believes in, the purpose of the business.

If your organisation has a very clear flag, then meetings can be mapped against this purpose. Each decision should be challenged with the question “Will this decision help us achieve the purpose of the business?”

Of course, there will always be differences of opinion, and people who simply want their own way. With a really clear flag, however, this could hopefully be reduced, to ensure that everyone is thinking in the same direction

If you are starting to think about exiting your business, therefore, and you want to see it last beyond you, start work on having clarity of purpose of the business, and ensuring that your employees understand and share in that purpose.

If you’d like help with this, then please get in touch.

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