Planning for life after the business founder
For many businesses the departure of a founder who is the heart and soul of the organisation can leave the company staring in to an abyss.
Who would then take over the company operations? Who can be trusted to carry on product development, key sales account management and service delivery? Who will build upon the foundations laid? The answer to many of these questions in an SME can be no one.
Much of the digital and creative sector is relatively young and is therefore fresh in having to consider many of these issues for the first time. What began as a hobby for many has grown into a viable and profitable entity.
At the time of writing, there has been a great deal of high profile coverage related to this subject and while much of it is based around these relatively new sectors many of the points below could well be considered by SME’s in general.
• For many entrepreneur-driven companies – including Apple, Facebook and Google – their brand, vision and product development are embodied by their founder(s). That can be changed over time so that the company’s brand image is primary, rather than the entrepreneur’s by ensuring there is more than one voice speaking for the company, but with a consistent message.
• These businesses do need visionary leaders but also need to ensure that the company is not moulded solely around them.
• The founder should gradually step away from being involved in the minutiae of day-to-day management.
• The entrepreneur needs to plan ahead. A company needs somebody lined up who can step in to the leader’s role. To do that, companies need to cultivate a culture of coaching, mentoring and innovation, developing employees to take on more responsibilities, including those of the founder.
• There will be others who have knowledge and skills whose loss could damage the company.
• What would happen if a key designer disappeared? Would the brand be as strong without this design inspiration?
• What would happen if the person in charge of a company’s website and online businesses disappeared? Without knowing the answers to the main issues involved in keeping income-producing websites up and running the online businesses may either cease or wind down over a period of time.
• A common challenge and a test of some of the issues around this: Can you take a holiday for several weeks, and leave the company to function (without access to phone and e-mail!) in the hands of others?
• Do not keep the details about your business in your head, make it known and write it down, akin to writing a will or a power of attorney for the company. The plan could specify who will handle product development, key sales accounts, financial administration and other functions to ensure the business continues to run, even if you are stranded due to an ash cloud!
• Ensure you have Keyperson insurance for the company. The money can be used in several ways, for example:
– recruiting or training a replacement,
– to repay a business loan,
– compensation for lost sales
• Prepare a shareholders’ agreement that spells out what happens if someone dies or is incapacitated.
• The founder could consider some of the following questions to assist in finding a solution:
– What currently happens when you are away?
– What’s stopping you from sorting this out?
– What do you want to leave behind from your business work?
– How do you want to be remembered by your employees, suppliers, customers and business partners?
• Some of the areas to consider are similar to grooming a business for sale. This should therefore add value to the business and help the founder believe that the company can mature and have a profitable life, with or without them.
If you don’t know who would succeed you in the event of an emergency, it’s time to start looking around your work place to identify and groom the next generation for leadership and let the company prove once and for all that it can exist without you.