One of the most satisfying and rewarding aspects of being an owner manager is seeing the development of your team. To know you have played a part in the progress of key individuals and the team overall is something of which to be proud. In addition this team development can be a major driver of growth and improvement for your business.
In the realms of exit planning team development has a number of benefits. Three principal ones are:
- The more capable your team the more you can delegate and rely upon them to manage the business. In turn this reduces the business’s, and your team’s, dependency on you. When it comes to planning an exit that involves a sale of the business you will welcome the flexibility and potential enhanced value that this will bring.
- In contemplating an ownership change having options is a real benefit. If you have enabled the development of your team to the point where they become a viable option for a management buy-out (MBO) or an employee ownership trust (EOT) your choice is exit is greatly enhanced and widened beyond simply, ‘putting the business on the market’.
- If you want to retain ownership but still want to exit from the day-to-day responsibilities of leading and managing the business having a well developing and high performing team will give you the potential to step back, either in stages by moving to part-time or completely. This doesn’t change the company ownership but it does give you freedom to explore other aspects of life while the business continues to develop.
Whether you have undertaken a structured development plan or the team have evolved ‘organically’ through experience and exposure what are the signs that your team are ready?
There are a number of areas to consider:
- Are they performing well enough for you to delegate to them tasks, responsibilities and the ownership of business results?
- Have they demonstrated a track record not just of reliable performance but increasing capability over an extended period of time?
- Are they asking, maybe pushing, for greater responsibility and involvement with both wider and deeper business management issues?
- Do you think that business will perform well while you are away, for example on holiday?
- Do you feel confident in delegating to them?
That fifth point is absolutely key. In talking to business owners about their team many can provide compelling evidence that delegated tasks are being undertaken well and responsibility has been transferred. However in spite of this evidence the feeling of confidence to ‘let-go’ is eluding them. The balance here is to build and empower your team whilst retaining overall control. Achieving this balance can be difficult and undermine the progress towards a successful exit.
On the other side of the relationship is the management team. One of the conversations I have with management team members who aspire to greater responsibility and potential future ownership is to stress the importance of providing the owner with ‘confidence’ in them. That includes managers showing evidence of their performance, that objectives are being met and tasks completed but it also includes language, timing and opportunity.
The decisions a business owner takes to let go and to consider ownership transfer are influenced by how confident they feel. It’s their business, they have invested considerable time and money to build it to the point where an exit is a real possibility, they have placed trust in people around them so of course they will be circumspect when considering handing this over to someone else. Progress needs to come from both the owner and the managers.
If you want more options for your exit plan and would value greater flexibility in your time commitment to your business it may be time to step-up the focus on developing your team. You’ll see the benefits of this investment in the short term as they take on more responsibility, in the medium term as you spend less time tied to the day-to-day running of the business, and in the long term when you have more options around how you undertake the ownership transfer / sale of the business.
Discover how Henchards can guide you on your leadership development journey, drive improved performance from your team and get you ready for a successful exit.
(Image downloaded from Freepik)