Creating a Successful Business Transition: Adopting a Transition Planning Mindset

The mindset of a privately held business owner is difficult to accurately describe.  Some years there is great success, while other years there are significant struggles…2020 could certainly be a year of struggle due to COVID-19. An owner’s mindset will often-times shift, based upon the overall state of their business.  This article is written to encourage privately held business owners to adopt an ongoing strategic planning process and to develop a transition planning mindset, no matter where the financial or operating condition of your business stands in any given year.  To assist you with this task, we address the topic of Adopting a Transition Planning Mindset as a primary step in Creating a Successful Business Transition.

Visualization Creates your Future

Business owners understand that a process of building a plan for the future is not as much about developing short and long-term objectives as it is about having the owner envision what the future is going to look like.  Business plans get managers aligned with their goals to achieve certain milestones and are a critical part of a successful business.

However, what is also critical to the process of Creating a Successful Business Transition is adopting a “transition planning mindset” that applies to all of the decisions that you are making in your business.  In order to best develop that mindset, it is essential that you first go through a transition planning process.

Transition Planning is a Process, Not an Event

Getting into business is often a relatively easy task.  But successfully getting out of a business – and having that business carry on without you – is a complex process that happens over the course of many years.  To be clear, we are not necessarily talking about the sale of a business when we talk about a transition.  Rather, we are discussing the many considerations that an owner needs to address in order to get their head around the idea of their business continuing on without them.  When done properly, a transition plan is created over a long period of time and is a process-driven exercise.

Adopt a Transition Planning Process

A transition planning process is one that helps owners understand their goals, measure their readiness to meet their goals, maximize the value of their business and then discover the transfer options and the relative business valuations that will produce the overall best result for each individual owner. Every owner and every company have different goals. The most important part of a transition planning process is that an owner gain clarity around what they want to achieve and begin to think through the manner in which they are going to achieve their goals.

When you commit to a transition planning process that walks you through the specific steps mentioned above, you begin to develop a transition planning mindset.  This simply means that the transition planning process is an educational process that assists each owner in considering not only what is going to happen in the future, but also what each owner can do today to begin to make that vision a reality.  A transition planning process that leads to the development of a transition mindset is essential to Creating a Successful Business Transition.

Developing an Transition Planning Mindset

When you complete a transition planning process, you should have a solid transition mindset.  What this means is that you have a clear vision of what you want to accomplish with your business and your personal goals in the future and you also have a number of immediate objectives that you can identify that will help you to head in the direction of achieving those goals.

A transition mindset is simply a lense through which you evaluate all of the decisions that you make in your business.  The question that most owners ask when they develop their transition mindset is: “are the actions that I am taking today simply executing on a short-term objective or are they contributing to a successful transfer of my business to someone else in the future?”

If you are considering having your business continue to run and be owned by someone after you, this is one of the most important questions that you can ask yourself on a daily basis.  When decisions are viewed through this lense, then one decision at a time, your business begins to shape itself in the direction of one that can run without you and aids you in the process of Creating a Successful Business Transition.

Benefits of a Transition Mindset

A transition mindset provides perspective for your strategic and tactical decisions.  A transition mindset forces owners to ask whether or not the decisions that they are making today contribute to Creating a Successful Business Transition.  And a transition mindset gives business owners confidence and peace of mind that they are moving in the direction of protecting the illiquid wealth that is trapped in their privately held business.

In short, a transition mindset is a pro-active approach to Creating a Successful Business Transition.  And, without this mindset, you may find it very difficult to identify a future owner who will see the value in owning your business after you.

Concluding Thoughts

Creating a Successful Business Transition is a challenging task which requires a certain mindset.  We hope that this article helps to provide a roadmap for understanding what type of commitment and mindset may be required of you to achieve your goals.  We also hope that this article helps you in making an initial determination of whether or not your business is actually transferable to someone else and which areas you need to improve to have a higher total ‘transferability score’ on the path the Creating a Successful Business Transition.

What’s your transition readiness? Take our 10-minute survey and find out.