When the pandemic first hit, like many others, I tried to convince myself if I simply hunkered down, it would all pass in a couple months. Yet as time went on, I realized – as you likely did too! – that at some point we had transitioned from a sprint to a marathon, and the uncertain times were sticking around. While there are some positive signs we are slowly emerging from the pandemic, the ripple effect it has wreaked on businesses, communities, and citizens around the world will be felt for months and years to come. And that’s just one of the crises we weathered!
As we redefine “normal” and begin operating in a deeply changed world, leaders at all levels are now presented with a two-pronged challenge – 1. How do we help our teams remain engaged and successful, and 2. How do we simultaneously stay grounded enough to meet our own individual needs?
While undeniably challenging, the current situation also provides opportunities for us to engage our workforce on a more meaningful – even vulnerable – level. It may feel uncomfortable and can be difficult at first, but it’s important to create an environment where our team members can bring their whole selves to work. As Jeremy wrote in his post “What Your Employees Really Want Right Now” last July, it’s not only about providing a safe and supportive work environment for our team members but also making sure they know we care about them and will do everything we can to support them as they continue to do everything they can to support us and the customers we serve.
As leaders, we can create this environment – even virtually! – by authentically living our values. That requires us to know what our values are, though, doesn’t it? The best leaders are values literate. They understand how their values shape their behaviors and how they are distinct from their personalities and skills. In From Values to Action, author Harry Hansen-Kraemer Jr. shares a model to help us lead authentically and connect deeply with our teams and colleagues. Hansen-Kraemer outlines the following four principles of values-based leadership for us:
Did you know only about 20% of all privately held companies offered for sale each year actually sell? And only around 30% of all family businesses in the U.S. successfully transition from their first to second generation. Maybe worse, 75% of all business owners who do sell their companies “profoundly regret” the decision one year after selling.
Throughout my career, I have worked around the world with organizations big and small – ranging from multi-billion-dollar Fortune 500s to government agencies to privately held family businesses and startups. Of all my experiences, I cherish the most those projects that have had the greatest impact on the people I worked with. So, when I learned these statistics on privately held businesses completing a sale, I knew I wanted to help business owners maximize the value of their businesses and ultimately exit on their terms. This is especially true for the countless Baby Boomers who will transition out of their businesses over the next 10 years – a movement that represents roughly 4.5 million businesses and $10 trillion of wealth being transferred!
Many business exits fail because of a lack of knowledge and planning. Two-thirds of business owners are not familiar with their options for exiting. Almost 80% have no written transition plan or advisory team in place to help them. Nearly half of all business owners have not done any planning, and 93% have no formal “life after” plan. Compound that with the fact that 50% of all business exits are involuntary, forced by dramatic external factors such as death, disability, divorce, disagreement, and distress.
Owners need to plan for how they will walk away from their businesses, not only in a perfect scenario but also in a worst-case situation. A properly planned and executed exit can handsomely reward the business owner for the time, effort, headaches, and heartaches that come from building a business. It also benefits the many employees who work in the business and all the customers they serve. The following, then, is a proven three-phase approach for unlocking the wealth trapped inside your business.
Discovery – When discussing future plans with owners, I like to ask one particular question. “When it comes time for you to step away from the business, what do you want your legacy to be?” This gives us direction, especially for owners nearer to their exits. It becomes the driving factor behind the actions they will take in the months/years ahead and serves as the “lighthouse” to accomplish their true goals.Other critical areas to explore include the owner’s readiness to exit. “What are you going to do when you exit the business?” and “Do you have enough money to do what you want to do?” are two more great questions to consider in this process. With the support of their financial planners, owners often realize they do not have enough savings to reach their goals with so much of their wealth tied up in their businesses. For this reason, we clearly need to consider the value of the business and identify specific areas that can be improved to increase business value and enhance the business’ readiness for the exit.