According to the article “Biz Tips: Why Effectively Developing Your Own Successor is Nearly Impossible” by contributor Michael Beck on www.oregonbusiness.com, baby boomers own a majority of small businesses, and they are expected to retire over the next decade. However, research indicates that there will not be enough outside buyers to take on those businesses, so selling to a successor will most likely be the best way for them to get the full value of their businesses when they retire.

However, the success of this path depends on the successor being able to make all the buyout payments and not messing anything up. To prevent that scenario, a business owner will want to develop a successor, and yet therein lies the problem. According to Beck, there are five challenges that prevent an owner from properly grooming a successor:

  • The relationship dynamic: In order for a successor to improve, you must have open, honest and challenging conversations in private. However, it is often impossible for a successor to have these sorts of vulnerable conversations with the person who will decide whether or not to bequeath the company to him or her. It’s unrealistic to expect a successor to share his or her weaknesses, fears and frustrations with you, and it’s equally unrealistic for you to challenge a successor’s thinking and expect him or her to respond honestly.
  • Group think: No matter how experienced or educated we are, we all have blind spots. Having blind spots limits our way of thinking and the types of solutions we can come up with. Furthermore, the longer you spend in one industry or company, the more you develop “group think,” in which you tend to think about problems and solutions the same way as everyone else around you. Group think limits your ability to seek different solutions. Getting past such blind spots requires outside perspective, making this another challenge for an owner developing a successor.
  • Being objective: Employees, spouses and you, as the business owner, all have an agenda when it comes to the successor. They either want the successor to make changes or keep things the same. However, in order for a successor to better his or her own thinking skills and judgment, he or she needs an unbiased sounding board.
  • Time: Successors must be developed, not trained. Development takes time, and successors need to deal with everyday issues and get outside perspective in order to mold their leadership, thought and interaction skills. However, most owners don’t have the necessary time to devote all the attention a successor needs in order to properly develop.
  • Skills: While business owners successfully develop their skills and expertise over many years, these are not the same skills that are required for coaching and mentoring a successor, which is what the successor needs. Mentoring does not usually come naturally to a business owner. However, mishandling a successor’s coaching can end up harming the company.

These are the challenges owners face when trying to groom successors, and in order to minimize the negative effects of these challenges, it may be best to bring in outside expertise to handle a successor’s development. After all, you risk the fate of the business if you hand it over to an underprepared successor.

Read the original article here.