In recent articles, we’ve been discussing how small business owners have quite a bit to think about if they want their business to survive when they leave, specifically, small businesses — as in “mom and pop” shops, especially those in which clients have a direct connection to an owner that does a large part of the interaction.
When transitioning a business to new owners/management, there are a few entities that need tender loving care.
Of course, there are the clients: If they don’t come for the ride, the business isn’t going to do very well. If they don’t like the new owner or the transition process, they can leave. No two people are alike, so the new owner will be different than the old.
Assuming the clients liked the old person (which probably is why they are clients), then there is a very real possibility they might not like the new one as much. Care must be taken to transfer their connectedness to their new contact. This is usually best accomplished if there is an overlap from the old to the new.
The key employees: In most small businesses, a very large percentage (often all) are the key ones. Lose these employees and you lose the relationships they have with clients and their knowledge of the business and gain dual headaches of needing to hire and train new staff.
Owners must realize it is scary for employees. They have the same issues as the clients but magnified. They may think that not only might the transitioning firm drop clients they don’t think fit with the new regime, but they may also want a change of staff, as well. Even if an employee’s job is secure, they are now forced into a daily relationship with someone they do not know well.
The new owner/manager: They have a new business to learn. Even if it is like their prior workplace, no two are alike. They have new clients, employees, procedures, area demographics, vendors, etc.
Two huge potential mistakes: Changing too much too soon and not changing enough eventually. They will constantly be compared to the old owner, who will either be put on a pedestal or used as a reminder of “old fashioned” ways in need of change.
If the latter is the case, new management will be expected to change everything at once, ahead of on schedule, under budget and with no disruptions. Building new relationships is a delicate process; done incorrectly it can create havoc.
The old owner/manager: Most people think leaving a business is cut and dried. But getting a business ready for transition must begin way ahead of time. Often, the old owner needs to stick around to manage the transition months or years after the turnover.
This could become problematic if they don’t agree with the new owner’s policies, are distracted by their upcoming retirement or become jealous of handing over information about “their” clients.
There’s a special case of transition that can make some things easier and some harder: Transitioning the firm to a current employee or employees. That can solve a lot of problems but also create some at the same time. That’s what I did.
Gary Silverman, CFP, is the founder of Personal Money Planning, a retirement planning and investment management firm he is not retired from located in Wichita Falls. You may contact him at www.PersonalMoneyPlanning.com.
This article originally appeared on Wichita Falls Times Record News: Your Money: A delicate affair | Opinion
Reporting by Gary Silverman / Wichita Falls Times Record News
USA TODAY Network via Reuters Connect
