In my work with remodeling companies, I sometimes see the same situation in more than one company. These days, with Baby Boomers aging out of wanting to own their company, I find myself working with several companies on transferring the company to the next generation of owners.
It is remarkable how different the approaches are that owners take to this process.
This Could Work Out Well
ABC Remodeling is currently owned by the father of three adult children who work in the company and want to take it over. The father is a dominating presence, full of energy and drive. His three children are much less outwardly driven. However, the eldest of the three will make a capable leader, in my opinion.
The father has some ideas of what he wants to do as he removes himself from the company. More golf, a second home on the beach, and more time with grandchildren are among the ideas. He has started to remove himself from the company by doing more and more of these activities.
There is a date by when he sees himself all but not involved in running the company. Everyone is working to make that happen.
The best consulting calls I have with this company go like this: 30 minutes with the future owners followed by 30 minutes with future owners and the father. In the first 30 minutes, the three children and I talk frankly about what they want the father to understand. The second 30 minutes I can say to the father, with the children on the call and adding in their comments, what I heard the children say.
The father listens and struggles to understand. And the transfer becomes more and more likely to happen.
This Is Less Likely to Work
MNO Remodeling is currently owned by the founder. The founder wants to remove himself from the company and transfer ownership to three key employees over the next two years.
The founder is a driven man who could be a better listener. He has me talking to the designated future leader, one of the three key employees, on a regular basis.
From what I hear, the founder is not allowing himself to be incrementally more managed by the designated leader. Meetings of the executive group (the founder and the three future owners) devolve into ineffective, frustrating interactions, so much so that it is not unusual for a future owner to look for a way to schedule themselves for something else during that time slot.
The future owners are not able to hold the founder accountable. The founder dismisses the future owners’ perspective on initiatives the founder thinks make sense.
The result is the future owners are frustrated and unsure of what the future holds for them and the company.
Even I am not sure of exactly what the founder wants to happen. Does he want the company to continue beyond his involvement? His behavior is making that less likely to happen. Or does he want the company to close down?
Their Differences in Dealing With the Future
The two situations are not quite opposites. In both cases the founders are strong presences and there are future owners who are not quite so dominant.
However, they are fundamentally different in one important way: The commitment of the founder to making the transfer successful.
The founder of ABC Remodeling is learning to be a better listener and to remove himself from the day-to-day while not getting in the way of the future owners. He is allowing himself to be managed.
The founder of MNO Remodeling is not listening well and is not supporting the future owners taking on more and more of the day-to-day running of the company. He is not allowing himself to be managed.
What Will Happen?
ABC Remodeling will likely move forward with a successful, but not perfect, transition. The new owners will probably learn some hard lessons at the School of Hard Knocks. However, I think they will pay the necessary tuition in lost profits, regroup, and become better owners.
MNO Remodeling could end up with the future owners leaving the company unless the founder changes his behavior and starts supporting the transfer process. This process is always awkward, as no one typically has done it before, but it must be committed to and honored by all involved.
I hope for the best for both companies. As a distant observer, I can only do so much. In each transfer, the necessary and difficult work must be done by the founder and the three future owners.
This is the kind of remodeling that can be the hardest work a founder will ever do.