7 things to consider when deferring to a management team

7 things to consider when deferring to a management team

There are only four ways to exit your business, so if you are considering retaining an income from your business.  What do you need to consider?

See our other article: 4 Ways to exit from your business

Exiting from your business by employing a management team sounds like a great idea, you can sit back and do nothing and watch the profits roll in.

So if this is such a great idea, then why don’t more business owners chose to exit from their business in this way? Well here are seven things you should consider.

7. Where can you find someone as good as you?

You are uniquely qualified, after all, you set up the business, you had the vision, the commitment, the hard work. You have a mixture of many skills, entrepreneurial drive, resilience, after all, if your business is over five years old then you are in a minority amongst business owners, as of all the people that started businesses when you did, over half of those businesses have failed. The older your business is, the rarer it is.

The truth is, you can be replaced, but at a price, and someone of your calibre is very sought after and will command a high salary, and even two people who are each 60% as good as you will be cheaper, but collectively will still cost the same.

This all adds to the cost, which reduces the bottom line.

6. All those hours you work

Chances are, as the business owner, the buck stops with you. While we have found someone to replace you, all the essential things that the business needs from you, setting strategy, managing people, planning, delegating, making and being involved in important decisions, and such, there is probably a lot more that falls outside that job description.

Who for example provides emergency cover, looks after keys, keeps an eye on things over Christmas, when you think about it, this can be quite a long list.

Again this can all be done, but it all adds to the cost, which reduces the bottom line.

5. All those benefits you enjoy.

As the business owner, you have likely benefitted from a few perks while running the business, using the business computers and printers, vehicles, all sorts of things can be enjoyed, perhaps you enjoyed business trips for work, entertainment, even charity is often channelled through the business

You can, of course, continue to enjoy all the things from your own pocket, which in turn reduces the bottom line.

4. All those benefits for the new team.

All those benefits you enjoyed, the new team are likely to want as well, pension contributions, expense accounts, bright shiny electric vehicles, the list goes on… Some of these you may have considered already, but these costs can often be hidden and not so obvious without thorough investigation.

Again this can all be factored, but it all adds to the cost, which reduces the bottom line.

3. All that history

There are probably things that only you know, that you need to transfer to the new team. This can be done, but it takes time, and unless you are now working for free, time is money, however, this could be money well spent.

Again this can all be factored, but it all adds to the cost, which reduces the bottom line.

2. All that culture

In a similar way to your personal knowledge, there is probably a company culture, things that only the staff know, that again you will need to transfer to the new team. You probably have customers with certain quirks, things that run a certain way, adaptations you have made over the years by trial and error that may seem strange to an outsider. Inducting new management into an already running organisation is very different from inducting new employees at the bottom or in the middle layers.

Again this can all be factored, but it all adds to the cost, which reduces the bottom line.

1. The risk

The big risk in letting go of your baby, your creation, your manifestation … is that you may not want to let go, that you will want to interfere, and that this could cause problems for you. You may have got used to being in charge, making decisions, and seeing certain things done in the right way. You may suffer personally from this feeling of loss of control, or even worse, you may interfere in the smooth running of the firm.

Interfering will certainly damage your bottom line.

Do not be tempted to keep any control, and make sure clear agreements are in place to stop this from happening. If you work through this process and get the right team in place, your business will thrive and you will really have created a legacy you can be proud of.

Planning to exit your business is a new process for many business owners – seek professional help and guidance from experts and professionals who can share their experience and knowledge with you along the journey.

Blunt advice from Yorkshire Powerhouse

Have you any questions?

Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:

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