“Don’t hang on too long and don’t let go too soon.” Boomer entrepreneurs often struggle with relinquishing control, and delegating and empowering others. When building a strong and motivated business team, the benefits of delegating and empowering key employees usually outweigh the risks.
However, there can be risks to letting go too prematurely, which when they occur, can cause the business owner, especially a founder, emotional and financial distress. Unfortunately, these risks can manifest during the succession planning process while the owner is attempting to transfer ownership internally to the key employees. Rightly delegating and empowering designated internal successors can backfire when their added responsibilities and empowerment cause them to discount and disrespect the perceived value of the contributions made by the founding entrepreneur business owner.
As an entrepreneurial leader with a vision and mission, the business owner took risks and made sacrifices to build the business and assemble a winning team for the benefit of all. However, the successors, unable to internalize and empathize with the owner’s entrepreneurial efforts, may replace their initial appreciation of entrustment and empowerment with a sense of entitlement. This, in turn, can cause the key employees as internal buyers to abuse the trust and empowerment bestowed upon them by attempting to leverage their position for monetary advantage during buyout negotiations.
The following are some examples of what the boomer business owner can do to lessen exposure to the risks mentioned, and avoid possibly being in a compromised position when negotiating to exit the business:
- Start planning years in advance of your departure. Maximize and protect the value of your business equity.
- Diversify your retirement funding beyond the confines of your business assets.
- Be diligent about establishing certainty with regard to your designated successors true loyalty colors. They could surprisingly change and disappoint you.
- Hire a team of trusted professional advisors capable of helping you prepare well in advance of your eventual departure. Include a professional to evaluate the characteristics and qualifications of the internal team for ownership and succession.
- Form an Advisory Board to include outsider members available as an advisory resource before, during, and after the transfer of ownership.
- Be cautiously selective about the extent of relinquishing control and empowering potential internal successors before entering into buyout negotiations. Don’t relinquish control too much, too soon. Carte blanche relinquishment of control can come back to bite you.
CLICK HERE if you’re a boomer business owner who’d like to learn more about managing the delicate balancing process for relinquishing control and empowering others.