Planning a way out of the pandemic chaos for business owners

Causes of turmoil—such as a global pandemic, political upheaval, social unrest, economic calamity, and natural disasters—often come in ones or twos, but 2020 has seen them all. More than a few business leaders are interested in a way out, at least temporarily. Getty Images

The list of hills we’ve climbed this year include global pandemic, economic recession, civil unrest, political turmoil, natural disasters, business shutdowns, event cancellations, and probably a few more. Over the past year I’ve written several columns about mitigating these disasters and finding a way to move forward, and hopefully many of you have been able to put some of these best practices to use. However, some of you may be thinking about stepping away from the business. Over the past year I’ve met with several people who are considering taking new roles, taking leaves of absence, or simply retiring. No matter what type of transition you might be considering, or for what reason, there are a few key guidelines to keep in mind.

1. Start Early

An article I once read in the Harvard Business Review stated that the best CEOs start transition planning their first day on the job. Transition planning should not be a threatening exercise, nor should it be a short-term exercise. Embrace it early and put in the effort a transition warrants.

I tell my clients to budget three to five years, at a minimum, for a succession plan. It is most beneficial to have the incumbent working directly with the replacement for a few years before the exit. Leaders should consider succession planning critical to their legacy. In the book Good to Great: Why Some Companies Make the Leap...and Others Don't, author James Collins details characteristics of Level Five leadership, which is the type of leadership at top-performing companies. The success of the company after a leadership transition is a key indicator of a Level Five leader. Set your team up for success.

2. Get an Outside Perspective

Engage professional services if needed. Hiring a consultant or consulting firm to create and execute the plan is a good idea for many reasons. Consultants are highly objective; they don’t have years of service at the organization and therefore are free of biases or agendas. Experienced consultants can help you avoid pitfalls and manage conflict or tension during the process. They know how to create plans and probably have templates from previous projects, which expedites the process. A consultant is specifically focused on the transition, so he or she won’t get sidetracked by the daily duties of running the business, which keep things moving forward.

3. Groom for Promotion

Know your bench. I call turnover the “silent killer” of business profitability. Turnover cost isn’t a line item in the profit and loss statement, and therefore many businesses take for granted how much it erodes the bottom line. The best way to limit the cost of turnover is to have a strong bench.

This is also imperative for effective succession planning. Typically, new leadership comes from within the organization, so investing in training and coaching programs for your employees is highly beneficial. Engage Human Resources to develop a list of potential candidates for management positions. Use the annual review process to discuss interest in career growth and long-term development. Once a transition plan is finalized, schedule a kickoff meeting with the impacted employees and any consultants involved.

These three tips merely start the process, but having a defined approach, with measurable deliverables, gets you halfway there. The rest is a matter of execution.

One caveat to this simplified approach applies if you are the business owner. The process for transitioning an entire company into to new hands is much more involved, and the professional support roles needed go beyond leadership development consultants and include accountants, attorneys, and a brokerage firm. This process is a completely different animal, and I don’t recommend going it alone.

My perspective is based on personal experience in supporting the sale of my own family’s business a few years ago. It was a positive experience and achieved desired outcomes, but the road was long and the hours were many. But, that’s a column for another time. Until then, best of luck finishing strong in whatever transition you’re facing.