In my early 20’s I went for a training run up a mountain. While this particular mountain is a relatively easy climb, near the summit it gets steep and slightly technical.

In those days, the trails were not well maintained. There was a great deal of scree (loose rock) which, if you didn’t know how to handle it, could be dangerous as well.

I made it to the top without incident. My goal for the descent was to avoid any slips, trips, falls, or injury without needing to slow my pace.

I did it! I felt great! As I neared the trailhead, I blasted out of the woods, into the parking lot and jogged to my truck.

I popped open the door…and smashed it directly into my shin bone. In pain, I stood there watching the blood gush out, run down my leg, and soak into my sock.

It was an ironic moment. I was injury-free for the longest and most challenging part of the experience. But at the very end, as I was getting ready to leave, I gave myself the injury was trying to avoid.

Don’t botch your exit

Unfortunately, this is a common scenario for leaders. To have a solid career, full of overcoming challenges and learning to achieve and stabilize success – only to stumble at the finish. Sometimes even completely botch the exit.

You might not use the word “exit.” You might use other words: Retirement, succession, transition, or moving on. For this article’s purposes, I’m referencing all of the above.

Why this really matters: The Silver Tsunami

Tons of Baby Boomers are exiting. Tons. Very few are setting themselves up for an exit that best reflects and preserves all of their hard work, sacrifices, success, and contributions.

According to the U.S. Small Business Administration, 75% of all U.S. businesses are owned by Baby Boomers. That’s literally tons of Baby Boomers.

About the same percentage Baby Boomers fill executive and senior positions in businesses, non-profits, and government positions. The majority are telling researchers that they plan to retire, sell, or move on to something else within the next three to five years.

In spite of this, only about 15%[1] are actively defining what a successful transition would look like and preparing for it. And it shows. Consider these statistics.

• Only 20%-30% of business owners who attempt to sell their business ever find a buyer[2].
• Only 19% of first-generation family business transitions are successful[3].
• Only 50% of executive transitions succeed[4].
• Only 25% of owners feel satisfied and happy with their choice to exit one year later[5].

What is success?

Success, simply defined, is when someone accomplishes their goal or purpose. Owners and leaders vary, but frequently expressed goals or purposes sound like:

• I want to leave my business/organization in good hands.
• I want to secure a bright future for my family/employees.
• (For owners) I need this sale to finance my retirement/what’s next.
• (For other leaders) These final years need to fund my retirement.
• I want to leave a legacy of success in my industry.
• I want to be able to spend more time with my family.
• I want better health.
• I want to travel.

This is how many leaders define success. You may define it differently.

However defined – your success matters.

As a leader, your success matters because it is about far more than cashing out your retirement ticket or finally sailing off into the sunset. Leadership is a relationship. What leaders do and stop doing, intrinsically, impacts others.

This includes how you exit.

What most leader’s think and what actually happens

Most leaders believe they control the terms and timing of their exit. They’ll say things like:

• “I’ll put in another 3 years and then I’m done.”
• “When I hit 65, I’ll retire.”
• “When I find someone who can succeed me, I’ll pass the torch.”
• “When I finally (reach a financial position), I’ll call it quits.”

Or:

• “I’ll die with my boots on.”
• “I like what I’m doing, I’ll keep doing it until I can’t.”
• “No one can replace me. I’ll keep things afloat as long as I can.”

All of the above statements contain one, fatal error: The assumption of control.

Here is what actually happens: Most leaders are pushed out of leadership.

In fact, here are the five most common reasons behind a leader’s exit:

• Death: Natural death is difficult to time, rarely comes on our own terms, and is a poor business strategy.
• Disability: Sometimes it’s an injury, but usually it’s a health issue. It may be the leader or someone that requires their caretaking. Disability can often sneak up on leaders. It may be a small issue that causes a temporary diversion of time and attention. Before anyone realizes it, the problem isn’t going away and the business is declining.
• Disagreement: Disagreements are common. Sometimes within the business, sometimes a lawsuit, sometimes a disagreement entirely unrelated to the business just overwhelms a leader. The leader’s change and transition tend to spark disagreements – an exit is a dramatic change.
• Divorce: Divorce always has a backstory. That backstory often has complicated ripple effects beyond the divorce event. This (usually) personal, private issue is a “top 5” contributor to forcing an exit.
• Distress: Burnout, stress, recessions, etc. Leaders unexpectedly hit a wall. Most leaders don’t recognize that they are burned out until they’ve already begun presiding over a decline.

Four Principles for Ending Well

One: Cultivate An Identity Outside Of Your Position and a Vision For What’s Next. One of the primary drivers of exit failure is that many leaders base their self-image, sense of worth, and value on their role. It’s more fun to be known as, “The leader of…” as opposed to “He/she used to…”

Frequently, this leader will confuse their personal energy and vision for the organizational potential and vision: When a leader feels tired and is ready to wrap things up – it’s very difficult for them to envision or lead into a vision that may require significant or long term effort.

If you love what you do and are good at it, it makes sense to identify with your job. But if leaving your role feels like a loss of identity, value, and purpose: You need to reinvent yourself. You need to figure out your vision and identify and where your sense of significance comes from – after you exit.

Leaders hate exiting. Reinvent yourself. Create something to go to your “Next Chapter” vision.

Two: Build Culture Not Followers. All leaders will and should have followers. Leaders who need to be the smartest person in the room, the hero who solves all the problems, the wizard behind the curtain – essentially build one-legged stools for organizations. They are the one leg.

Organizations with proprietary leadership, who have custom-built their roles to fit only them, struggle severely when the leader leaves or tries to leave. Or, the leader won’t leave but also won’t contribute.

Build a culture (and strong, supporting systems) based around core values, priorities, and behaviors. This allows people to grow and succeed by working together, not just because they are working for you.

Three: Get Financially Ready More often than what most people think, high earners are unprepared for retirement or to move independently out into “what’s next.” A few have pensions or retirement plans, though that is farther and fewer in between or not as robust as what might be hoped.

Most business owners are counting on the sale of their business, but haven’t taken the time to build one that is ready for sale and attractive to buyers.

Develop your plan for your “next chapter.” Figure out what it’ll cost and prepare for it. I strongly recommend talking to a good financial or wealth advisor. If you are an owner, find an advisor who understands the business owner dynamic.

Four: Pay the Piper Similar to deferred maintenance, deferred leadership accrues costs that eventually must be paid. Many leaders develop well-honed abilities to avoid addressing problematic issues.

Sometimes there are just difficult leadership decisions, character issues, or just tough (or boring) work that needed to be done. It is very common for these issues to come to a head right at the end. They often are behind the 5 D’s I mentioned above.

Be honest about unresolved issues, decisions, or unhealthy patterns. Deal with them. Get appropriate help.

Conclusion

You ran a good, hard run. You’ve seen the heights. You’ve built success.

Don’t injure yourself on the way out.

Very few leaders plan and prepare for theirs to be a success (not just for them – but for those they lead as well.)

You should do it.

Everything I described above is just a part of doing normal leadership well.

In fact, doing what I describe above will not only help you avoid problems on your exit – it will actually build a more enjoyable and, often, more profitable present.

Take good care,

Christian

P.S. If you know your exit is on the near horizon and would like help preparing for it, reach out to me. I’ve helped many owners and executives prepare for very successful exits. I can be reached at Christian@christianmuntean.com

 

[1] Exit Planning Institute: State of Owner Readiness

[2] Exit Planning Institute

[3] https://www.familybusinesscenter.com/resources/family-business-facts/ – For decades this hovered around 30%. But in the last 5 years, with the emergence of the Millennial Generation, it has dropped by a third.

[4] Inc.com

[5] Exit Planning Institute

 

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