When a leader’s transition is sudden—due to a financial crisis, an accident, illness, or even death—those involved are likely making decisions during an emotional time, and those decisions are often poor.
Planning ahead removes the emotion so you can make clear decisions about how you want the business to operate. It makes life easier for your successors. Start now, while you have the right team around you.
An exit strategy has two primary components. The first assumes everything will go as planned, and the second is a contingency plan in case a substantial change causes the first one to fail.
Here's how you can ensure an orderly leadership transition when the time comes:
- Identify your desired end result. Will you sell or liquidate the company, or transfer ownership—and if so, to whom? A third party? A family member?
- Enlist experts and stakeholders. Involve your accountant and attorney. It’s helpful to have an experienced, well-qualified financial planner. Include everyone who will be directly involved in the transition.
- Choose a successor. Identify a staff person who will help the business stay nimble in the short term while working toward long-term goals.
- Communicate the decision. The successor is more likely to stay with the company and to be ready for leadership if he or she knows the plan and other staff know what to expect.
- Document the plan. If the transition is sudden, others will know what to do and speed the process along.
- Assemble resources. Fund the plan and put resources in place to ensure it will work.
Make sure you allow enough time. A typical leadership change takes three to five years.
If you haven’t started planning your exit strategy, today’s the day.