Noticeably slimmer from our last meeting and looking faintly weary, Khalid revealed that he was having sleepless nights lately pondering over his retirement plans. Having run his plastic moulding manufacturing company for close to 30 years, the founder and managing director now finds that “it is more difficult to pass on a business than to start one!”
At 59 and with his three children firmly entrenched in their respective professions, the SME entrepreneur had recently decided to put more thoughts into the future of his business. He found himself overwhelmed with questions like “Will my company carry on or do I sell it off?”, “Who’s going to manage the business when I’m no longer around?” and “How will ownership be transferred?”
After having initially considered selling it off and exiting the company entirely, Khalid in the end decided that it was better to select and train a right successor to keep the company going. Hence, that’s when the sleepless nights started.
The reality is that many SME entrepreneurs do not spend enough time on business succession planning. For many, it is perhaps psychological as we generally refrain from thinking about our mortality. Yet, however hard we shy away from it or attempt to delay it with Botox treatments; it is as Russell Crowe playing the role of Maximus in Gladiator remarked, “Death smiles at us all. All a man can do is smile back.”
For others, business succession planning is something better left for the future. But the future or even tomorrow may be too late as ill health, accident, disability or death can occur anytime. When that happens, without a proper succession plan, the entire organisation could be left disorientated and uncertain on what to do next.
Technology advocates, or more specifically, Apple disciples would have been distressed by the recent announcement by Apple founder and CEO Steve Jobs that he will be taking his third medical leave in the last seven years. Combating a rare form of cancer and having already endured surgery and the effects of a liver transplant, he said that he was handing over the day-to-day operations to his chief operating officer Tim Cook. The announcement resulted in an immediate decline in the company’s stock.
Fans of Apple’s revolutionary creations including the iPod, iPhone and iPad were already worried about their future toys, while financial analysts expressed their concern for the Apple brand during the absence of its charismatic leader. It is well known that Jobs’ hands-on approach to product design and his remarkable salesmanship are the reasons for Apple’s revival in recent years.
Yet, both in his memo to Apple’s employees where he declared, “I have great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011,” and based on the continued growth during Jobs’ last leave of absence in 2009, Apple followers should have no reason to fear.
Cook has headed Apple before. First for two months in 2004 when things went so well that Jobs promoted him from executive vice president to chief operating officer. The second was in 2009 when during the almost six months he was in charge, Apple released a new version of the iPhone and the iTunes app store recorded one billion apps downloaded within the first nine months of its introduction.
Another technology leader that has penned down his company’s succession right to the dot is Microsoft founder Bill Gates. The multi-billionaire decided in 2006 that it was time to step down from day-to-day operations at the company he founded to devote more time to the Bill and Melinda Gates Foundation, dedicated to bringing innovations in health, development, and learning to the global community.
Gates left long time business partner and current CEO Steve Ballmer in charge and since then Microsoft continues to be global leader of the personal computing market, although many readily would point out the growing influences of its competitors such as Google and Apple.
Closer to home, I was saddened by the passing of a public listed technology company’s young CEO about three months ago. It was less than a year before that I had interviewed him for a feature story and I recalled we spoke about how he was already training his management team to take over the business when he retires. He said that it was “important for an entrepreneur to plan ahead as one never knows what will happen tomorrow.”
Planning for their retirement is not something many SME owners embark on, let alone work on plans to hand over their business to someone else. Yet, sooner or later, it is something that has to be done. Business succession advisors tell entrepreneurs the longer time they get to spend on business succession planning, the smoother the transition process is likely to be.
As Apple and Microsoft has effectively shown, having the right business succession plan is place will ensure that the brand and the company continues to prosper long after you have walked away from the worn-out CEO leather seat. It would at least assure you of a good night’s sleep.