The Business Transition Blog

The Importance of Asking Questions

Anyone who knows me knows that I love questions. I’m naturally curious and I like to understand what’s going on in the mind of the other person. If you can better understand others, their perspective, their wants and needs, their values and beliefs, their rational and emotional reasons for doing what they do, then you are in a better position to:

  • Communicate more effectively,
  • Address their wishes and issues,
  • Have a more meaningful, honest discussion,
  • Help them get what they want,
  • Better position your ideas to match what’s important to them.

When it comes to selling your business, a prospective buyer will be very curious too. They will want to know as much about you and your business as they can, in order to judge the value of your business as well as to understand what you want to get out of the deal. They’ll want to know why you’re selling and what’s critical to you in this negotiation. In addition, they will have a long list of questions they’ll want you to answer.

In order for you to be prepared and show that you’ve thought this through, you’ll do better if you know what those questions are and have documented the answers. If you’d like a free list of due diligence questions that a buyer is likely to ask, you can request it by sending me an email: WAV@TACresults.com.

You too should have questions. What is the buyer looking for? Why are they interested in your business? What will they do with it once they buy it? What are their priorities? How will your employees be treated? Will they want you to stay on? For how long? How will they structure the financing? How many businesses have they purchased in the past? What is their track record? What changes have they typically implemented once they purchase a business? Would they see doing that here? What else do they see? How does your business fit with their short and long term goals? Will they plan to move the business or leave it where it is? What are the strategic advantages to them in buying your company?

Stephen Covey wrote: “Seek first to understand, then to be understood.” Most people are happy to answer your questions because they want to feel understood. It’s an innate desire that we have. You can tap into that and ensure you are making a win-win agreement that benefits both parties by asking good questions.

Service to Others

Take a bucket and fill it with water,

Put your hand in it up to the wrist,

Pull it out and the hole that’s remaining

Is a measure of how you’ll be missed.

                                    S.W. Kessinger

The Indispensable Man (we could add Woman to this title) is a poem often cited for cautioning leaders to be humble as they exit.

But I think there is another message here for leaders – a successful transition should look like exactly like this…barely a ripple when it’s time to move on.  How we start is important; how we finish is the true measure of success.  Preparing all our stakeholders to move forward without us is a priority.

While we most often think about what’s in it for us as business owners, seeking ways to maximize our rewards after years of hard work, it’s worth considering succession planning from the perspective of service to others.

In 1970, Robert Greenleaf published an essay outlining the concept of servant leadership. Since then multiple authors have added to this theory that leadership must be about more than the acquisition and hoarding of power.

At its core is the basic principle that servant leaders recognize their responsibilities to a broad base of stakeholders – their employees, clients and customers, as well as the community in which they do business. They accomplish their goals by serving others. The Greenleaf Foundation’s research suggests servant leader institutions have improved retention and higher profits. Always good markers when you are transitioning your business.

As you prepare for succession, consider ways to serve others:

  • Share power rather than hoarding it.
  • Push responsibility and accountability further down the organizational chain.
  • Help individuals develop the necessary skills and ability to carry on without you.
  • Build capacity in the processes and structures of the organization as well as in the people.
  • Then, track and evaluate your progress in these strategies.

The world looks different when you are other-focused rather than self-focused. Sharing power, looking after the needs of stakeholders, and lifting individuals to their highest level of performance are key ways to serve others.  When you do, everyone wins. And you might be missed more than you would have otherwise.

Back to Basics

Here’s the basic question: If YOU don’t address and plan for your succession and the transition of your business, who the heck do you think will?

Burying your head in the sand, looking away, putting your head down, putting your nose to the grindstone, are all euphemisms for denying this obvious and necessary question. Rearranging the deck chairs on the Titanic didn’t put off the inevitable. Your business is going to change from your hands to someone else’s. Period. The question is, how and when. “If” isn’t in the equation at all.

What are your options?

  • You can do it in advance, on purpose, with a plan, giving yourself options, control and time to make the best of it.
  • You can leave it to someone else to do without your permission, your insights, your strategies, your concern for employees and customers and hopes for the future.

If you were to die with your boots on, without a plan in place, here are some possibilities:

  • Your employees could carry on, doing their best to keep the business going, keep their jobs and pay your family what they can out of profits – if there are any. But if they have the ability to do that when you’re gone, you should get them to do it now so you can oversee the process and coach them so they do it well.
  • Your kids or spouse could take over. Maybe that’s the informal plan anyway, but if it is, you should formalize it now when you are still confidently in control and able to mentor them and help them succeed. You might also find that they aren’t interested and you need to come up with Plan B before it’s too late.
  • Your creditors could call your loans and force your family or estate to sell even if it isn’t the best time in the market to do so.
  • Your former spouse or a shareholder could demand that the business be sold for pennies on the dollar. 

There are other options, but they don’t get much better. As the owner of the business you have an obligation – a responsibility to do what needs to be done so that when the time comes – and it will come – your business will transition according to your plans and wishes, not someone else’s. Because that’s the basic question: If you don’t initiate it, who will? That doesn’t mean you have to do it on your own, but you do have to make the first step and get help.