Are You Ready? Human Capital and Business Transfer
By Maria Forbes
September 16, 2015
Business owner clients face a multitude of challenges as their businesses grow. Working with business owner clients is a rewarding partnership. We get to strengthen our client’s success through the people that drive it. Moving full speed ahead, helping clients to navigate various stages of personal development and team expansion maintains their ability to meet organizational goals. At some point, and often out of the blue, the “I want to implement a three to five year exit plan” conversation happens. The conversation we always address early in our relationship, the one that gets a response but not a plan, has been lingering in the background for some time. Recently, another scenario has become prominent; the three to five year exit agenda is the driver; owners seek their replacement. Any way you look at business growth this conversation is inevitable. A personal contingency plan is easy to avoid when owners and leadership teams are humming along, able to sustain their energy and maintain the personal demands of their busy schedules. But one day there will be a change of heart, a burning need to do something different, and a wish for a new chapter of their life.
When owners and partners are focused on the managing of present circumstances and current goals, a future plan is easy to put off for another time. However as life unfolds, owners and partners often hit the point of no return – they feel a sense of urgency to plan for a different future, and since much of their life has been devoted to their business, this will require a number of transitions.
There is nothing like transition to cause stress among a team. A good exit planning consultant treats the transfer process with a broad view. They will implement a series of transfer processes but the first part is critical. A thorough assessment of an owner’s personal goals and time line, used to help determine if, and when, a transfer is a realistic benefit. A good exit planning consultant will determine business value and something very important; whether a business is ready to transfer.
We’re not just talking equity and earnings. People drive business success, and they have transferable value. Consider the following key readiness assessment questions.
- What current organizational capabilities can you identify that would attract an internal or external buyer?
- What organizational capabilities are required to maintain the current level of success, can you define these?
- What organizational capabilities will be necessary to move the business into the future?
- Are there roles that will change in order to transfer the business?
- How will you plan and manage change to ensure organizational strength?
Human Capital has value. You can measure it, illustrate its impact on business growth and transition, and use it as part of the total valuation. Human Capital Valuation considers both individual and collective strengths of people and processes within an organization. These values can be positioned to determine the best ownership and leadership strategies for a successful business transfer.
If you are thinking about an upcoming change in your business, contact us at FIREPWOER Teams…we can help….