Succession Planning is So Personal
Business owners put off succession planning for a number of reasons. It is hard work that takes time away from the day-to-day operations. Hiring professional advisors to assist with the process is expensive. It disrupts the status quo and creates risk for the business. And many owners honestly (and in most cases, legitimately) believe that, if push comes to shove, they will simply sell their companies.
But a less obvious reason is that the process isn’t just business. It’s personal… or at least it feels that way.
Why So Emotional?
At the core of succession planning is an emotional paradox that forces business owners to make difficult choices and betray their instincts. In overly simplistic terms, the more successful the successor becomes, the more inadequate the business owner might feel. The more the successor builds the founder’s legacy, the worse the founder is likely to feel about it.
Adding insult to injury, the more that departing leaders suppress their instincts to take charge and instead give their successors enough autonomy to properly establish their own authority, the more intense these feelings can become. And when success is coupled with substantive change (or worse, because of it), the owner can start to feel downright inferior. Even when the changes are due to relatively benign generational or stylistic differences, they can feel like direct criticisms.
So Why Do It?
It is therefore no wonder that so many entrepreneurs perpetually procrastinate when it comes to this time consuming, expensive, risky, potentially unnecessary and definitely emotional process. But for those owners who can detach themselves from the process and view the succession itself as a product of their own design, the rewards (both financial and personal) can be significant.
There are few wealth creation opportunities that compare favorably to ownership in a smoothly running private business. And when the founder can see the successor’s success, no matter how achieved, as yet another one of his/her own successes, the personal fulfillment can be tough to match.
Due to the numerous business and personal impediments to succession planning, we recommend that business owners engage a professional advisor who is familiar with the emotional aspects of the process to guide them through it. Hiring advisors who focus too heavily on the sanitized analytics or basic mechanics to the detriment of the softer issues adds unnecessary risk to an inherently difficult task.
Bootstrap Capital
If you have clients who cannot bring themselves to take on the emotional task of succession planning, please consider introducing them to Bootstrap Capital. Our approach is to provide turnkey succession plans by personally managing our portfolio companies. We have extensive experience as business founders, owners and leaders, which we bring to each and every one of our portfolio companies. In short, we provide the liquidity and leadership that business owners who lack a succession plan need in order to retire.