Management versus Leadership
Why This Distinction is Important to Your Exit

 

 

The Objective of ‘Management’

 

The owner of a privately-held business is many times also the manager of that business.  When you manage your organization, you drive it to success and profitability.  But when you consider your exit plans – i.e. how and when you want to leave the business – a different skill set is required.  A large part of this new skill that exiting owners need to learn is leadership. 

 

If you are considering an exit from your business, you are likely way beyond the point of needing to survive in your business.  With a financial cushion, you need to consider the more personal and emotional aspects of departing your business.

 

 

The tools of exit are different than the tools for growth

 

Let’s first examine how the skills of leading an exit are different from those required to build the company.  We will use a helpful analogy – mountain climbing. 

 

Climbing up a mountain requires determination, focus, strength, and management of many obstacles.  The ascent is often arduous, creating doubt in the mind of the climber as to whether they will reach the Pinnacle.  There is a summit that can be identified and a specific point at which one turns to begin the equally, if not more so, challenging act of descending down the mountain.

 

On the way down a mountain a different skill is required.  One’s weight is now working against them.  There is a different need for balance and coordination of activities.  In fact, Sir Edmund Hillary is not so much known for his ability to be the first Westerner to scale Mount Everest.  Rather, he is famous because he was the first to survive the descent.  Will you, and your business, survive your exit?  The answer to this question may depend upon the new leadership skills that you learn.

 

You need to be a leader in your exit, not just a manager of the exit

 

Your exit will require a different skill set than growing your business, the same way going down a mountain requires different skills than going up.  You need to adopt a leadership mindset towards your exit.  In fact, it will mostly be your ability to let go of the responsibilities that you have grown so attached to that will define the success of your exit.  In order to let go you need to build a team who can assume your responsibilities.  And in order to build that team effectively, you need to become a leader.

 

Your team will help your future owner manage the business

 

Your exit will depend on your team because that team will lead your company into the future.  Think of the situation in these terms . . . no matter how you decide to exit, it is the company that will pay for it.  And, it will be the team that you develop who will run the grow that company into the future.  This is true whether you exit via sale to an outsider, or whether you exit via internal transfer to managers, family or employees.  Someone has to run the business and be empowered to do so.  The team that you build and lead will be that catalyst for the future and will define your exit.

 

Are you developing your talent on a regular basis?

 

A leader is able to see out over the horizon and prepare for changes within the marketplace and the business.  The success of your exit will depend upon your ability to replace yourself in this regard.

 

Do you have a process for recruiting new talent and assessing existing talent within your organization?  Are you able to let go of large responsibilities and trust that they will be handled well by those that you lead?  These are critical questions to ask in advance of your exit because turning over the reigns of a business is often an emotional event for an owner.  Working through this emotion and putting the right people in place is an unselfish act that is done for the long-term growth and survival of the business. 

 

Empowering Others – An Unselfish Act

 

Management is more about getting a task done, often with the self-centered objective of successfully driving a result.  Leadership, however, is about the empowerment of others. When you move from management to leadership, you focus on the strength of your team and begin to more effectively work yourself out of your job.  This, again, is where emotions and personal feelings of feeling needed in the organization can get in the way. 

 

You worked hard to establish your position in you company, industry, and community.  Now you need to work just as hard to replace yourself in that role.  This unselfish act (or more appropriately, series of acts) sets the stage for a successful exit because you are building your own replacement by leading the organization to a whole new level.

 

Your Vision for Your Exit

 

Remember that you are accountable to yourself in this process of change and one of the best ways to have success is to have a post-exit vision.  Almost all owners struggle with letting go at some level.  This is where your post-exit vision needs to be aligned with your personal values and a clear vision of how you will spend your time away from the business.  When you can define your post-exit vision, you can work faster towards being the leader that your organization needs you to be to more effectively handle your exit plan.

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