If you’ve ever owned a business, it's not a stretch to say you have dreamed of the day someone would come and pay you for your company. That is an oversimplification, but I thought about it a lot, and then it happened. Selling your business is one thing, but then comes the scary part, the transition from owner to president.
First: Why You’re Sticking Around
It’s common in most cases, a business sale will include a term or number of years that you agree to work for the company in a lesser capacity. This period is usually a learning period for the new owner. It allows them to work alongside you and learn how the business has been handled in the past, and if they have ideas for changes, it’s an opportunity to look at how implementing those changes would affect current business before making permanent plans.
Transitioning from owner to president would seem to be a lessening of responsibility, a chance to relax a little, and possibly enjoy the job.
In actuality, the transition seems to raise the bar and increase your attention to detail. It creates a need to prove that the new owner's decision to purchase your company was a good one.
Remember: You are No Longer in Charge
Once you sell the business, you are no longer in control and no longer does the buck stop here. Even though the day to day operations may fall to you, the bottom line on money spent falls to the new owner. In a business where you made all significant decisions, you now need to consult with the owner on major decisions.
This will be a completely different role than what you’re used to, and there will be moments of frustration. In those instances, it’s good to remember that while you may no longer have the final say, you also do not bear the burden of responsibilities that you once handled as the owner.
Creating a Job you can live with
It is important to create a role you will be comfortable with moving forward after the sale. Discuss the position in which you will be most useful to the new company and ensure a written contract to be followed by the buyer and seller. Know that this time is best used educating the new management about the intricacies of daily operations, why the company employs the current methods, and how it can improve if money was no object.
You will also need to decide how you will present the sale to your clients and, just as important, to your industry colleagues and strategic partners. Consider how you want to become known professionally as you transition into this new role, and make sure it is spelled out in your contract.
Consider a transition of passing off the title of the owner and becoming founder and president. Introductions can then be made introducing "Our company's new owner" while explaining that you will remain on for x years as president.
The biggest question you will hear from employees, clients, and business partners will be, "How does this affect me?" Although they will be happy for your success, they will still be concerned with their own. Be clear that this will be a smooth transition with the full support of the new owner. When you attend industry functions, be sure that you are both on the same page and project a united front.
There will be issues that need to be worked out, but any discussion must be handled exclusively between this new management team. Do not undercut one another in front of employees. "This is the way we have always done it" or, on the other hand, "I'm in charge now" are statements that will undermine a smooth transition. If employees sense conflict or feel like they will have to choose a side, it may be a reason for them to look for another job. Similarly, clients who hear warning bells of strife may start looking elsewhere for a consistent work partnership.
Creating opportunities while backing away
As you work through the transition, think about all the things you wanted to change to grow or streamline the business and why you could not implement those changes. Was it time, workforce, or budget constraints? Has the sale freed up cash flow and made it possible for these changes, and how will the changes benefit the business moving forward? If these possibilities were discussed before the sale, now is the perfect time to implement changes to improve the company.
In your role as president, there is an opportunity to act in a consulting capacity and offer sage advice on how to improve the business. Is there a list of clients you have wanted to go after but never got around to making the call, is there an opportunity for a new avenue of cash flow you can implement? Consider this a chance to grow the business you built without the personal expense of a capital campaign.
The transition over time will ensure the preservation of your legacy. Founders want to see the company as a successful, thriving ongoing business, and a two or three-year transition will help it get there. Consistent transfer of power while maintaining the quality flow of goods and services will allow the new owner to establish themselves in the industry before your departure, creating a successful way forward for all parties involved.