How many times have you heard the advice begin with the end in mind? It's common wisdom shared as we start projects, create speeches, or plan the steps toward completion of an important goal. Yet, despite what is seemingly common sense, many entrepreneurs and business leaders don't heed this advice.
The future is yours...or is it?
A good friend of mine, Allan, has spent the better part of the past 30 years building a successful strategy consulting business in the mid-west. He has a very strong reputation with his clients, some of them having passed this relationship to their second generation business leaders. He provides service to world-renowned organizations and has secured a healthy mid-six figure income for a number of years.
Over their 40+ years together, Allan and his wife have developed a very deep sense of purpose and a conviction that the next stage of their lives should be spent in service to their faith, providing pastoral care abroad. In order to fulfill this new life dream, he recognizes the need to transition away from his business. However, he will need to replace at least a portion of his historical earnings with continued consulting fees, the sale of his business, or both.
We have had many conversations with Allan about his plans, and have learned a great deal from his experience. Among our many lessons are these two critical items:
- Allan is his business brand. He operates as a sole proprietor, selling himself and his capabilities as a strategist and partner to his clients. There are no other partners in the business, no affiliation with other, similar consultants, and he has never had an apprentice or protege; therefore he has no succession plan. His clients are very loyal, but without Allan, his business does not exist.
- Allan has a very structured approach to his strategy design process, which is time-tested. However, it is built upon the framework of someone else’s copyrighted work. He has no product or intellectual property of his own, therefore, he has nothing other than his own consulting services and personal partnership to trade on.
It is still early in Allan’s personal transition journey, but he may have compromised his ultimate dream for his mid-term goals and objectives. He might find that he has to work in the business much longer than he anticipated in order to save enough to pursue his passions, or he may find that the intended future is permanently (and sadly) out of reach.
The challenges of the entrepreneur
We have the tremendous fortune to work with and learn from founders and business leaders at the inevitable crossroad that comes when they face moments of transition. Such transitions come when planning retirement, chasing a new dream, pondering the growth or dissolution of a business, buying out a partner, or handing the reins over to the next generation.
Each of these businesses was founded for good reason, and often with multiple end goals in mind. These founders usually start their businesses with hopes of:
- Making a better product
- Providing a better service
- Having greater freedom and autonomy
- Enjoying a different lifestyle
- Pursuing a passion
- Making a difference in the world
- Earning more income
- Creating a legacy
- And many more
And, while these leaders put incredible effort into crafting the initial business plan, including carefully articulating their objectives, when the time comes to execute, their paths have often shifted and/or they sacrificed long-term objectives for short-term reasons.
We have seen situations where decisions were made to minimize tax implications, so retained earnings were traded in favor of taking distributions, paying back initial investments, and start-up costs. A perfectly legitimate decision in the short-term, however the impact to valuation when it comes time to seek investors, sell, or dissolve the business can be devastating. Not to mention the emotional cost of thinking you’ve built a business worth millions through your blood, sweat, and tears, only to find that you've unwittingly eroded its value.
The leaders we’ve been speaking with often face similar issues related to talent. In Allan’s case, the choice was to go-it-alone which, as we’ve seen, has its own implications. In other situations leaders made early choices to bring in friends and family members. These capable, trustworthy and loyal compatriots were instrumental in forging the business, yet over time little attention was paid to developing their skills for the future. Promotions were made on the basis of longevity and loyalty rather than skill, knowledge, and fit for the growing organization.
In some cases, relationships have dissolved, but rather than have difficult conversations along the way, partners and team members have ‘resigned in place.’ Instability, fear, disenchantment, anger, and resentment are the result; ultimately with negative impacts on performance, productivity, and service to the customer. Such staffing choices impact an organization’s ability to attract and retain the talent needed for sustainability and growth, and can directly impact a leader’s ability to pass-the-torch. As a consequence, the appeal of a business to potential investors and strategic partners suffers.
Start by envisioning your future
These are but a few of the important lessons we’ve learned through our work with entrepreneurs and business leaders. Their experiences highlight the necessity to be present-focused while also keeping the end in mind. Realizing your dreams for the future requires both near- and far-sightedness, and not just a little courage and perseverance.
When devising any future goals, dreams, or plans, be sure to consider the future and how you want that to look. In this way, you can work backwards to create a strategy that not only aligns with your vision for your life today, but also has the best interests and motivations of your future self in mind. By doing so, both the present and future you will be in the best position to live the life of your dreams. Now doesn’t that sound exciting?!