“Give up the rock, baby!”
Sports fans or even casual observers of college basketball will likely recall the sound of Dick Vitale during the midst of a game saying, “give up the rock, baby!” Yes, Vitale truly understands the value in the game of basketball of passing the ball off to other players. This entire concept of giving up the rock caused me to ponder in relationship to succession planning situations I’ve encountered. I’ve discovered, one of the most difficult things for a business owner to do is “give up” their business. But, why is it so hard to pass on? Well, as I’ve never firsthand experienced it, I don’t have all the answers; however, walking along numerous owners who have, I do have a few common observations.
First, let me differentiate between a business owner and entrepreneur. Many people attempt to use these words interchangeably; however, there is a distinct difference when it comes to their strategy in business. An entrepreneur is always building the business looking for the opportunity to “give up the rock” and find the next game to play. While they’re very strategic in developing the plan for making the pass, the ultimate vision and goal is to make the pass. Vice versa, a business owner desires to build something of value and the business becomes more like a precious child to them. They find satisfaction in taking care of, nurturing, and shepherding their business. Sometimes, this leads to more of a lifestyle business where the owner enjoys what they are doing, it funds a reasonable lifestyle, and they enjoy the freedom that comes with that position. What’s wrong with that? Well, in many cases nothing, until the time comes to “give up the rock”.
Yes, in many cases, I would draw parallels in parenting to transitioning a business. To business owners, this is their baby that they have cared for, nurtured, watched grow, protected, etc. Just like a parent must let go and encourage a child to move out on their own to continue to grow, a business owner must let go and allow others to continue their legacy. That being said, it’s very emotional and extremely hard for a parent to let go as is the same with a business owner. So, at the core, what are some of the common reasons I’ve noticed for someone having such a challenge? Well, we only have time for a couple today.
One is clearly control. Yes, most people who’ve gotten to where they are at in business didn’t get there by not taking charge, making things happen, and controlling their own destiny. Control is normally deeply rooted in insecurity and a fear of failure. So, as a business owner looks at passing on leadership of their business, they are extremely insecure and fearful of what might happen.
One area of this fear, in particular, ties to finances. Most owners have personal guarantees on their business debt or, even if they’re debt free, the transition of the business is what will fund their lifestyle for years to come. So, as much as they want to believe in the successor, the truth of the matter is that it’s tied directly to their personal financial security and depending on the means of exit, they could have to place an extreme amount of trust in someone else. So, if the owner can continue to see minimal risk, they are more than likely to continue in the business as long as possible such that they are still in control of their own destiny.
Another, which is interrelated to control, is that a business owner has been “the man” for such a long time and they’ve never taken the time to invest and raise up another leader to build trust and continue their legacy. The process of bringing on a leader, building a relationship, and handing it off takes time even if the next generational leader is an all-star. For various reasons, most owners are not intentional early on in identifying and maturing these leaders. While I don’t have time to address today, this process is extremely more complicated in a family-owned business as the next generational leaders may or may not be qualified to lead the business.
So, succession planning can be an extremely emotional process and one a typical owner will push off. That being said, we often tell folks that they’re going to have to have an exit plan at some point, it’s whether it will be planned around the board room table or the casket. Unfortunately, for the business and those left behind, planning it around the casket, or even nearing the casket, can be devastating to that which the owner worked so hard to create.
So, how about it, are you in a place where you need to be more intentional about your succession plan? If so, we can help as we have aided many and know others who are nationally known experts in this field.