Whether they’re close to retirement or in the height of their career, every business owner will exit their business one day. And while it may seem too early to plan for that eventual exit, there are always steps that can be taken to maximize value and ensure a smooth transition. One of the biggest steps involves the people that make up the company.
I’d like to tell you a story about John, a successful business owner in his mid 50’s who runs a professional services firm. Realizing he wanted to begin preparing for retirement but had done no planning, he decided to create transferable value in his business to make it attractive to potential buyers.
John invested in a strong management team that embodied the company’s core values and played to their strengths.
But, he made quite a few mistakes along the way. First, John hired on skills alone and found that he was ignoring cultural fit. Many people had the skills, but their behavior did not align with the company’s core values. Other times, John wasn’t clearly defining the role he was hiring for. This created confusion for him and his new hire. There was inefficiency because roles were overlapping. He also had hired people that didn’t have the soft skills necessary for leadership like communication, empathy, and problem-solving abilities.
With lessons learned, John knew that he had to clearly define his firm’s core values, which included innovation, collaboration, and integrity. He knew that any new hire, especially at the management level, needed to share these values. He also had to be clear about the role and its responsibilities and ensure that managers had the soft skills needed, along with technical. This alignment would ensure the company culture remained intact and would appeal to potential buyers.
Next, John carefully assessed his existing team, identifying their strengths and areas for improvement. He promoted Jeff, an excellent business builder with exceptional leadership skills, to Head of Sales and Marketing. Jeff’s collaboration skills with clients and coworkers aligned with company’s core values perfectly.
To find the right people for other key positions, John employed a thorough recruitment process and looked beyond resumes and focused on cultural fit and strong belief in the firm’s mission. After several interviews and team interactions, he hired Mark, a seasoned project manager who took an innovative approach of using technology, to Head of Operations. John also hired a finance professional with strong integrity to be Head of Finance and Accounting.
John’s efforts paid off. By hiring a solid, values-driven management team that placed the right people in roles that played to their strengths, he enhanced the company’s transferable value. This transformation made the firm highly attractive to potential buyers, which ultimately led to a lucrative sale. The new owners valued a transfer of leadership that felt seamless based on the foundation John built, ensuring the continued success of the business.
