Sustainability and Durability for the Future: How to Support Growth, Encourage Succession, and Build Upon Your Entrepreneurial Success
November 02, 2020
Many businesses struggle to gain clarity as they prepare to grow and transition from a traditional entrepreneurial company to one that is better positioned for a successful future. In this brief podcast, Lisë Stewart and Natalie McVeigh share a few ideas to strengthen the business, lay the foundation for the next generation, and ensure that the company has a plan and process to effectively pivot from the entrepreneurial stage to the durability stage of the business lifecycle.
LS: And we've had a good time talking about some of your most recent clients. So I know you had some interesting case studies. Would you like to identify maybe one of the clients you've been working with recently? Of course we won't mention them by name, but we can talk a little bit about their situation and what's going on for them. We'd love to know more.
NM: Absolutely, Lisë. Yeah. I had a client in New York City recently that hired me because they were going to start bringing in their adult children into their business. And they're a great company, they've been around for several years. Mom and dad started the business together. Both held executive roles that never actually had titles in the organization. And when they were thinking about bringing in that next generation, they were realizing, how much they'd done successfully, but ad hoc. And it was making it harder to create a pathway for someone to come in the business. Also to explain why someone else might need to be coming in from the outside rather than internal talent.
LS:You know, I know that a lot of businesses kind of struggle with getting that kind of clarity and figuring out what to do next. What are some of the tools that you use to help a business like this?
NM: Yeah. We like to talk about what we call a transition map, or a mind map, where we really find out, what the founder entrepreneurs were doing and did do, and what they enjoy doing. Most of the time when we talk about either people being promoted from within, or bringing in someone externally, it's to take some of those things that could be either administrative or operational that the founders don't enjoy anymore, and a great learning category. So we really said, who does what? And what we found out from this husband and wife team, one was really the CEO/COO, and the other was the CFO, really based on the roles. So one was a chief executive and did a lot of the operations, and the other did the financial pieces. And so when we did that, we were looking for the opportunities for their next generation to come in.
Now wonderfully they had two children, one who had a financial background, and one who had a general business background. So we were able to carve out some of the CFO role and turn it into a controller role for that next generation. And part of that COO, leaving the CEO as dad, but that COO role for the other sibling. So we started to find out what the jobs were, mapped that, and then see the criteria from their children's background. Now, although we were looking at their children, it wasn't at the exclusion of other people in the company, because we were creating a position so that it didn't feel personal. It just happened to be that these young people had the right skill set.
LS: So tell me, we've got a company that's been pretty entrepreneurial. The parents have been running this, and now they're creating some space for their kids to come in and you and I, as consultants, we often talk about the importance of moving out of that entrepreneurial phase towards something that's a little bit more sustainable and durable. So when you're working with a family like that, what are some of the other things that you do around, like building the bench, or other things in the business that you feel are important for helping them to really work through that kind of transition to greater professionalism?
NM:Yeah. So with this family, we really did start with those job descriptions. What are we doing now, and where do we want to be doing? Where do we want to spend our time? And what we found is their bench is they had really talented people, people that growing up together, mom and dad had grown up together with these people, love them, they've been in the company for 30 years. And those people were really good individual contributors, and that worked for a timeframe, but when we're looking to say, could someone be the COO or a controller who could eventually become the CFO, it was very clear that they couldn't, and the things that they were good at, they were great at, and mom and dad didn't have visibility into. So we started getting job descriptions for everyone, and that was a job description to advertise out in the marketplace, as well as a functional job analysis of what are we doing? Are there any gaps? And then we started cross training people, not necessarily building in redundancies, but really allowing people to see other areas where they could grow, where they could develop as individuals, and for the organization. So that it wasn't the case that they always had to bring people in the outside.
And as we brought in the two children, the two adult children, we also had to start explaining why they were the right talent. So it didn't disrupt the culture that had been built over so long of a time. So there really was this process of integration, onboarding, and orientation throughout that. So there was a lot of change happening and entrepreneurial organizations change, but they do so really organically. And so this process was much more structured and we wanted to make sure that that change was comfortable for many of the people in the organization, and we didn't lose some people who are used to those highs and lows happening as we're starting to stabilize the organization going forward.
LS:Right. That is just a lovely example. So Natalie, I think that we've given our audience a number of different ideas, of things that they could do. Really, as we talked about trying to stabilize that business and give them a really good foundation for the future. And remember for any of you that are out there listening today, if you'd like to know where to start, what you can do, and how to get information, be sure and give Natalie a call. She is an absolute pro. You can also find more information on our website at www.EisnerAmper.com/CIOP. Thanks, Natalie.