571 | Second-Generation Transitions in Small Business: The Dos and Don’ts for Founders

Hey folks, before we kick off today's episode, I wanna touch on something crucial that we like to call Fake Delegation. Ever do that you think you delegate, but find yourself micromanaging or taking tasks back.

It's frustrating, right? You're left burnt out, your team slows down and your business doesn't grow. That's why we created five ways You Fake Delegate. It comes from our own combined experiences and challenges in business, and our desire to always serve you best.

We've been there, and this guide is our way of helping you navigate those delegation missteps. Grab it from the show notes, it's free, and might just change the way you lead. Now onto our episode.

Welcome back to the Chris LoCurto Show. Today we're speaking to transitioning a family business to the next generation, the dos and don'ts for founders in this succession planning that is coming up next.

Welcome to the Chris LoCurto Show, where we discuss leadership and life and discover that business is what you do, not who you are. Welcome to the show, folks.

I hope you're having a fabulous day wherever you are today, we're talking about something that is probably gonna affect so many of you out there, and that is what does it look like to create a succession plan for the family, right?

If you've got a, a young one or you know, some, maybe a couple of kids, you know, depending upon how you wanna do this, I'm always going to say that I hate partnerships, I don't love partnerships, and sometimes in families, it seems difficult not to create that.

I'm always gonna suggest that you could always set up one that is the lead of the business and then pay the other, like an owner. But that's neither here nor there. That's not really the main focus of today.

The main focus of today is what does it look like to set up a succession plan, you know, I should say a transition plan that also includes a succession plan.

I'll get into those details in just a second. Now, I am barely gonna scratch the, I'm gonna hit a ton of stuff and it's gonna be scratch on the surface. And this is, there's so much information. This is gonna be a two-parter.

So this is two parts of dos and don'ts and things that you should be doing. So there's gonna be a lot of information on this, and this is, in my mind, this is vitally important.

Now, if you have zero plan on transitioning your business to one of your children, or you know, somebody in the family, or somebody you love dearly or you know, maybe a, a a a, a great leader inside of your company or somebody who wants to buy whatever it is, if you don't plan on doing that, you plan on maybe just selling the business sometime in the future.

Okay, great, that's fantastic. That would be a completely different plan. But today what we're talking about is what does the plan look like to transition to the next generation, right? What does it look like to have things in place for that?

So I, this is something just literally, I think it was today. Was it today or yesterday? I think it was even today. We were talking through, my wife and I were talking through one of our side businesses.

We've got, we own multiple businesses, and one of the businesses we were talking through, you know, what does it look like for our five-year-old to someday take that over if she wants to, you know, how do we structure that business that if she wants that business in the future, what does that look like?

Yes, she's five. Does she know that that's what she's gonna want? No, of course not. That's ridiculous. But there are aspects of it that she really loves and enjoys, and she happens to be the daughter of a man who teaches this kind of stuff.

So, you know, she's gonna learn a whole lot between now and then. My oldest, who is also in the business and is a phenomenal coach and teacher, you know, she's learned this stuff for a very long time and is doing an incredible job with this.

So you need to be thinking about looking at your kids and saying, okay, well what does it look like if this child wants to go this direction?

You know, but what if she's not five? What if she's 25? You know, what if she's 30 and you're at a place where you're like, I just really am done. I wanna get out of this. I I wanna start working on this process.

It has been said that a great family transition plan can take up to 20 years of transitioning, depending upon the size of the business. Now, some of you out there going, we could probably get it done in a couple of years.

Maybe the business isn't as big as something that takes that long. Maybe you've had a child, one of your kids that have been working in the business for a pretty long time, so maybe it doesn't look like it's gonna take 20 years, but here's what I'm gonna bet you.

I bet that it actually is going to take successful, successful transition is gonna take longer than you think. I bet you don't have enough details or haven't thought through this enough to realize how much it's gonna take to transition your current business to a, a child. I, i, the next generation, I should say it that way. I shouldn't say a child to a 7-year-old.

What does that look like? No. So we're gonna get into the dods and don'ts, and the first thing that we are gonna start out with is that by far you have to have a formalized, formalized, I'm not talking about notarized, I'm not talking about legal. You know, you gotta go out and make this--

I'm saying you have to have a formalized transition plan that is down and right, and some of you might have to get this legalized as well, some that might be a smart move to make depending upon your current situation.

But to start out, this is in the starting phase. The first thing that you should be working on is what does a formalized transition plan actually look like?

We're talking about structuring a roadmap with clear, clear steps, with clear expectations, with a clear timeline. One of the big issues that we find a lot is sometimes the owner, the founder, thinks that they're gonna wanna retire in five years, and then they might be emotionally attached to the business and it takes 'em 15 years. You know, it takes 'em 20 years to let go of the business.

So things that we need to do is we need to sit down and not just spend five minutes on a timeline that says, you know, Hey, well I'll turn this over to you in five years. We need actual clear steps of what that looks like.

So I want you to think of this as a strategy, right? As a strategy of what are you going to do?

We talk about, you know, in StratPlan all the time, we talk about the destination. Here's where we're headed. Here's the things we're gonna accomplish, what timeframe is it gonna take to get there, and what are the exact steps of how we get to that destination?

It's not our final destination, it's one of 700 destinations, but it's the next destination that we're working towards.

We need a clear plan, a clear roadmap, clear steps, clear expectations. Clear timelines of how do we get there? I can't say that enough.

So if you've written down, Hey, well, we'll do it by this time, and there's no steps to it, you don't have a strategy, you have a dream until you put steps to it, until you put aspects of things that must get accomplished, then you don't have a solid vision.

You have a dream, you don't have a solid strategy, you have a dream, right? So we've got to sit down and say, what does it look like? How long could it take? And this is gonna require a ton of questions.

Again, I'm only gonna scratch the surface on this. I can't give you all the questions you need to ask, but just think about it. What kind of questions should you be asking?

When will this person, my child, the next generation, a person who wants to buy this, whatever it is, again, we're talking family transition today, when would my child be ready to, to take over this business? Well, you really can't answer that without a whole lot of other pieces of information.

How much are we selling the business for? Do we have a valuation on the business? If it's gonna take five years, what do we expect the valuation to be at that point? Do we want to adjust as we go year by year and the business grows or doesn't grow?

The last thing you wanna do is be locked into a price, you know, as the child and five years later, that company is worth, you know, 50% of what it was when you locked in the price, right?

At the same time, what if the company explodes and you as a founder locked in a price that's incredibly low. So what we need to do is start working through what does it look like?

What does it look like to transition the business? What does it look like to put a timeline? And then what are all of the steps? And I just nailed some of the steps for you. I'll hit many more as we go along, right?

So as all these dos, consider these steps that you need to accomplish as we go along. One of those things is, is how are we gonna evaluate the business? How are we gonna put a price on this thing? And what does that look like?

Are we gonna get a professional in here? Are we going to base it on something that we both, you know, maybe we've got such a phenomenal relationship together that we can base it on a price and you know, we'll agree on this thing together and move forward.

I would try and get some level of a professional valuation. That's just me. It doesn't mean that you don't trust your child. It doesn't mean that they don't trust you. It's just a really good basis for you to operate off of, right?

So what is it gonna cost? Then what we need to figure out, this is a piece that doesn't have to be one of the early pieces, but this is something that is super important. How are we gonna pay for it? What does it look like?

I'm gonna throw out the first option and tell you that I hate it. 'cause I hate debt. I don't do debt. Most people are looking to do debt when they're doing a transition. I hate that concept. I think it's terrible.

I think you have many other options. Instead of just going straight to debt, especially in a family transition, you've gotta realize how old is the founder or the, the current owner. How long are they planning to still be around? You know, if they're, if they're in their fifties or sixties, they've still got plenty of years left, how much money are they wanting to have?

You know, if we come up with a price and you know, let's say it's a, I dunno, $10 million business that we want to, we wanna transition $10 million from the next generation to the, the founder for the business. We're just gonna use some decently simple numbers.

How much money does that founder need upfront? They've been making money off the business for quite a while. Do they need a big chunk?

You know, this is where you have to be reasonable on both sides, whether it's the the owner or the next generation owner. Do you need $10 million right now or do you need 2 million? Or are you okay with $1 million?

Right? If you take a look at, and these are just examples, I'm just scratching the surface, giving you some examples, but let's say we take a look at the bottom line and it's a $10 million business.

It has a one to $2 million net profits every year that, you know, that's hitting that bottom line. Let's say we're getting a $2 million net profits to the bottom line on a $10 million business, that's looking pretty darn fantastic, pretty amazing.

And so we have tons of money to say, Hey, can I pay you out in the next 10 years, a million dollars a year of net profit? We've got so much money coming in now. That's a fantastic looking situation. You know, that's plenty of money to pay off the owner.

Chances are, if there's that much money on the bottom line, they're taking a good chunk of it anyways, right? But it still is the transition from that owner being responsible, having duties, all that kind of stuff, and it going to the next gen.

Could you pay 'em out of the proceeds? Right now? What does that look like? What if the business doesn't have that much money?

Let's say there's $500,000 net profit on the bottom line, but we've been growing at, I don't know, 30% or 20% growth each year, year over year for the last five years. So we're projecting that there's gonna be considerably more net profit over the next 10 years.

Could you do a scale of payouts? You know what, if it's a, we look at an opportunity for, maybe there's something inside of the business that is an asset that we're not needing anymore, we could sell that off. We can transition some of that money.

What if we just put money back? What if we say, you know, instead of spending money on things right now, what if we just started stockpiling money? And that could be a down payment to the owner.

There's all kinds of different options that you can do. There's all kinds of different ways that you can handle this. The key is if you are a the founder, the owner, do you wanna put your child in a ton of debt?

I just don't think so. I mean, I hope you're not thinking that way. I hope you're not thinking that.

I'd hate, son, daughter, I need $4 million on as soon as we transition, and I know you don't have any money, you're gonna have to get a loan so that you can pay me 4 million, but I need that money. Well crud.

If you're the next gen owner, then I would say, that's stupid. You're gonna go get in debt for $4 million. You know, you really need to consider this, right?

Because if there's not money to pay it off the bottom line, at least a decent chunk of that, again, I'm gonna say don't do debt, but then that means that you're having to handle whatever's on the bottom line, that net profit, you're gonna now have to handle this big debt that you take in.

What happens if you have some down months, maybe some down years, there's a really good chance you're not gonna be able to cover that nut every month that you have to crack, old saying, of the debt load plus the lower net profit, plus the stress that you're experiencing, because we're having some down months or down years.

So really the whole debt concept needs to be thoroughly considered. What does it look like if things fail?

If there is a way to pay it out through the bottom line, great. If there's other options like assets or things, great, there's a ton of different ways. I'm not gonna go into everything because I'm, I'm never gonna make it through this show, but that's one of the clear steps that we need to focus on.

What does the transition look like? Now, let's say right now it's a $10 million valuation on the business, but we're not transitioning for five years.

This is where I say you have to know, you know, we have to have a, a part of the plan is, hey, we're gonna reevaluate the valuation of the company four years from now, and take a hard look at where we are and what we think it's going to be in the next 12 months after that.

So let's say the company is now worth 8 million. Well, you don't wanna pay out an extra 2 million. What if the company is worth 20 million?

Well, then we probably have much better funding opportunities to the owner off the bottom line. It's very possible. I can't promise that you will, because some companies don't, but it changes the way we're looking at the business, right?

So, tons of options. I'm just giving a couple of, of basic ones to you. So let's talk about aligning vision and goals. One of the most important things that you must do, so this is one of the clear steps, is sitting down and discussing the vision and goals for the company.

So as I see this, most people go, well, what do you mean, Chris? I mean, the vision and goals will be the vision and goals that I've had for the company forever. I mean, it's, it's the company I've created. I want it to look just the way that I created it.

That's fantastic, but you're now transitioning this business over to somebody else who's going to own it. Do they own the same vision that you have for the company? Right? The next gen may not see it that way.

So if we take for example, you know, our daughter and a business that right now we have the a, a great vision for great growth. You know, it's one of our, our side businesses, but we have great vision for it.

We have great ministry tied, tied to it as well, serving people, well, all this kind of stuff. But by the time it gets to her, it might be, well, I, I don't have the same mission that you do for this business that involves ministry or serving people on this, because that's not my thing.

I want to take this and blow it up on this side over here and, and make lots of money. Now, I don't think that's gonna be our daughter, because that's not what we would teach. But you know, maybe that happens in your family, right?

Maybe you've got a child that is already well advanced in years and is like, no, I'm looking to go make a bunch of money. Okay, well then they're probably not gonna carry the same mission that you have, right?

If you haven't been training them on that mission since they were little, then is very highly likely they're not gonna care, or they're not gonna be as excited about that same mission. So then what does it look like?

How do we align the vision and the goals We have to start asking the question to that next gen. What do you want this to look like?

How would you run this? What do you want this to look like in 5, 10, 15, 20 years? What is you, you know, don't tell me what I want to hear. I actually wanna know if we do this transition, what do you plan on doing with the business?

Because guess what? There's opportunities to not transition it to the next gen as well. You might find somebody, maybe there's somebody inside of your business already that's been with you for a long time, that loves the business, loves the mission, and will carry on, you know, the way that you envisioned it, and they'd also be able to buy it and run with it, right?

So if the vision of the thing you built, and I'm, I'm not talking about being selfish and self-centered, so please understand, I'm not saying because your vision is so amazing that it needs to be carried on. You know, you need this legacy through your vision.

What I'm saying is, is what if you set up something that is really affecting people in a positive way? What if there is a great service aspect, a ministry aspect to it, whatever it is that's taking care of people and you're just not concerned with the dollar aspect of it, right?

You want to keep, you want to keep running and making money, but the reason why you want it to do so well is because you want it to continue the mission. You want it to continue to serve and take care of people.

Well, if you've got a child who is great, fantastic, you know, wonderful child, but they have no desire to carry that mission, maybe you don't transition to that child.

Maybe instead you look for somebody who wants to carry on the mission, you could always help that child build a business that is making money, you know, doing something else.

Again, I'm gonna say, as long as money is not their only focus, it is profit is not our number one focus. You know, I believe because of my belief system with God, that money is definitely necessary.

And, and it's something that is a fantastic tool, but it is not more important than anything else that, you know, my relationship with him and anything that he's called me to, right?

So things you need to think about, what does it look like if you do have a child who wants to just go make a bunch of money and you, you want to help 'em out? You have to work through that process, right?

So let's say that the child does, I keep calling it a child, but this is an adult child at this point. So the next gen, let's say the next gen owner is all on board for the mission, or, or let's say they are, you know, 80% on board for the mission that you have.

Well, now we have to align vision and goals, right? You know, if you've got a, a vision of what this business is gonna look like in 5, 10, 15 years, and now you're gonna transition this business, how do we align what you want it to look like and what the next gen owner wants it to look like? Okay?

So if they're 80% on board with your mission, you might be perfectly fine with that. And then you have to work through, so what does that 80% look like? But what's the 20% look like?

Are we booting this? Are we restructuring this? What's the goal, right? What is the thing that we're gonna do now as we look at this business over a period of time? Why is this so vitally important?

Well, I think you've probably already figured this out because if you and your your child, your next gen owner are not on the same page, this transition is eventually gonna get super rocky because you're going to be somewhat emotionally, both of you.

Or if you have multiple kids and maybe your spouse is involved as well, whatever it is, both sides are gonna be emotionally handcuffed to certain elements of the business, right?

So, for example, if this other business that we have, if it was something that was just really making a huge impact on people's lives, and growing people, and teaching people and training people, and let's say our, our youngest decided that she wanted to remove those pieces and make it more transactional, and we're talking about this transition all of a sudden, and she's good with 80% of stuff, but there's some pieces she wants to yank that I think are really, really blessing people, but she sees it as unnecessary.

We're now gonna have some struggles. We're now gonna have to work through, you know, for us, we would be working through what that looks like, but for some people it might be downright a battle, it might be downright mean and, and ugly and not worth it at all.

So that's something you have to think about, you know, what does it look like for both parties to actually align their visions and their goals?

If we can get this started early on, let's say we're, we're transitioning in five years, or three years, or 10 years, if we can get this started early on, then we can get to an agreement of what it should look like, and then we can remove the emotional handcuffs, right?

We can get to a place of going, I'm willing to give on this. You're willing to give on this. You know, these are, you know, this is my vision. We're adjusting it some so that it will become your vision.

So not only can you remove the emotional handcuffs, but then you can do something super important. You can help transition those aspects to set the next gen up for success.

If you are not struggling with identity, if you are not struggling with worth, if you're not struggling with anything emotionally on what this transition looks like, then you can start helping that next gen owner transition five years early, four years early, three years early.

You can help them by working with them to get to their vision of what the business is, right? So yes, is it difficult? Abso-stinkin'-lutely, yes. Can it be a battle between family members, abso-stinkin'-lutely.

Is it smart to walk through this process? Oh my gosh, I actually think it's ridiculous not to. So again, to not make this a four parter, let me move on.

By the way, you could always ask questions. We would love your questions podcast at chrislocurto.com. This subject, any subject, feel free to ask questions. If things don't make sense, maybe we can always do a Q&A episode or something like that.

So once we've aligned visions and goals, here's the things that we're gonna try and accomplish. You know, again, that gives you as a, as an owner the ability to help transition into the any direction changes that need to be made.

But here's something that's super important. This is something we talk about all the time in StratPlan. And by the way, if you're planning on transitioning, it might be a great place to go.

You need to make sure that the whole company is pointed like laser pointed towards the next direction, right? The next vision. You do not want to have a shotgun approach.

One, you shouldn't have a shotgun approach in your business right now, which many of you do, because you're literally wasting resources left and right, and people aren't all moving in the same direction.

But you definitely don't wanna have it when you're transitioning a business. So just know, don't have it at all. Let's get laser focused on where we're going.

So during StratPlan, one of the things that we talk about is how do we make sure every single KRA in the business is aligned with the current StratPlan?

So we know that we don't have roles that aren't necessary, roles that aren't wasting money, roles that aren't, you know, we thought was a good idea, but it's actually literally not how us to get to where we wanna go.

So just, you know, things that we need to think about. Speaking of roles, one of the things that we have to work on is what's called a succession plan. Now, a lot of people will consider a transition of a business, a succession plan.

For me, my thoughts on this and and many people are in alignment with this, is that a succession plan is actually transitioning the roles and the responsibilities. So let's say, I'll give you an example.

I've helped many family businesses transition from the founder to next gen. So a great client of mine decided, you know, the owner was the majority owner, had some, had at least one partner in the business wanted to transition down to his kids, also with the other partner involved, because he wanted to accomplish some other things in life, personally realized- He came through Next-Level Life and realized, you know, I got stuff to do. I want, I have things I wanna do.

So as we walked through this transition plan, one of the things that we talked through was, what does it look like to take the CEO out of the CEO role? Now, this took a while because I had to convince the CEO that the day-to-day admin.

And it wasn't just me, family, rest of the leadership and all that kind, fun stuff, but we had to convince him the day to day admin or the day to day tasks or the day to day things he did not need to be involved in.

We set up a good plan, good processes, you know, the way that it, the business was gonna operate in the future. But we needed him to step away from the day to day and start working on, 'cause the greatest value that he had at that time in the business was not the day-to-day.

The rest of the folks had been doing it for the longest time. His kids had been doing it for the longest time, the partner was in there for the longest time. Instead, it made more sense for him to continue to go out personally and create relationships.

This is somebody who loves creating relationships, who loves interacting with other folks. And so what we worked on is, hey, let's get you away from the day to day. Things are operating incredibly well.

Why don't you go make some bigger connections for the business? And then you don't have to spend time doing administrative stuff, right? You can get out there, you have this great sales experience, you have this great networking experience.

Go drum up bigger roles, go drum up bigger jobs, go drum up bigger sales, bigger clients. And it worked fantastically. And it was for a while until the transition happened. And man, it went great.

He did a great job, created business, created new clients, all that kind of fun stuff. And it allowed him to not stress about the day-to-day stuff. So something you have to think through is, what does it look like?

How do we transition roles? How do we take, like, let's say, you know, in this situation, he was transitioning the president role to his son, the CEO role to his son. And in doing so, what we had to look at is, is well, what is he going to do?

How is he gonna step over and take over your CEO aspects while you let go of them? It's something that people don't think about. It's not easy having two people fulfilling one role. You literally have to properly delegate. As we talk about over and over again.

You literally have to properly delegate those tasks. Well, guess what, as a CEO, it is not something you can delegate within a couple of weeks. There's things that you're doing most likely or should be doing that would take a while to set somebody up for success.

So you need a great succession plan to set up that next gen for success. But what is that next gen owner leaving, right? How do we properly delegate the stuff off of his, hers, you know, tasks the daily to-dos, right? How do we make sure that the stuff that that next generation owner is doing gets properly delegated to somebody else?

We don't wanna double up and give that person a ton of things to do. So we need a great succession plan of how we're going to take roles, responsibilities, and start transitioning.

Once again, if you have not downloaded our proper delegation e-book, go to chrislocurto.com/delegate, get that sucker so you can start delegating those aspects, right?

Another thing you need to do is you have got to, oh my goodness, you have to develop and establish a phenomenal communication strategy.

Nothing is worse than when we're having a transition inside of a business, inside of leadership, and the rest of the team doesn't know what the heck is going on. They don't understand, they don't get it. They think something's wrong.

Here's what happens when you don't communicate well, fear invades your team. When a team has to assume what's going on, they can see a transition is happening, they can see something's going on, or maybe you've even mentioned that there's a transition, but you have not effectively communicated what's going on in the strategy, then they start to assume and fear sets in.

You can't be surprised if some of your team members think, oh my gosh, there, this is gonna be a terrible transition. This next gen owner doesn't know anything about this stuff. I don't see them doing anything or raising that person up so I better get out before this ship sinks because this thing is probably gonna sink.

That's just an example of what people experience. It could be that you have team members that don't love the next gen person as much as they love the current owner. So there may be some communication pieces that have to happen to build trust, to build loyalty.

But no matter what it is, your team needs to know what's going on and what they can expect. You know, what can they expect from this transition and what is it gonna look like?

Next thing, you gotta update your legal documentation and your agreements. You know, as you go through this process, you need to see what's out there that you guys have agreed upon, and what parameters, and you know, what details are being offered to clients.

Let's say you have, again, the next gen's gonna change some things. Well, if you've been promising something to people, you may have to make adjustments to that. You may have things in certain names, certain entities, there's a whole bunch of stuff you have to go through to make sure that you get all of the documentation updated as much as possible.

Again, this, this is just the first part of a two part series. Next thing you need to do is you've got to invest time in training.

So first thing you have to do is you have to understand the importance of really, really knowing each personality style of each new successor. So if it's one person coming through, you know, let's say maybe you're a high D, high I, and you're transitioning this business to a high S, high C, wow they are not gonna run it the way that you would, most likely, they're gonna run that business considerably different than you would.

So you have to start thinking through, are there aspects that I need to train them up on that can help them to become a better, stronger leader in the the, the areas that this business is gonna need?

A big piece might be recognizing that they can't handle all the stuff that you've done, right? So if you're a high DI, you're high SC child might not be able to run the business the way that you would do it because of the way that they process information.

They might not get to decision making as fast. They might not be as proactive on things as you would, they might not be as visionary as you are. So is there somebody else who can kind of step up and come alongside, or, you know, let's say the next gen owner becomes the CEO.

Can we create a president role of somebody who could support the CEO with some of those aspects, right? What does it look like to come alongside the CO with somebody who's very visionary, but is very loyal to the CEO?

So you've got to recognize the different personality styles within the family and how to utilize and delegate properly. So if there are things on your plate, let's say maybe, you know, like my buddy who transitioned to his son after so many years, he had that great aspect of being a fantastic networker. Well just praise the Lord.

So does his son, right? That is something that aligns really well. But what if the next gen owner you're transitioning to can't stand that. Again, I'm using the DISC as examples.

If you're somebody who's a great networker, but your daughter, son who you're transitioning to hates that, that is total conflict. They love the business aspects. They can run the business, you know, inside and out from the administrative aspect, but they're not a great networker, and we need somebody who can get out there and hustle some big game.

Well, what does it look like to transition that aspect from the owner to perhaps a new salesperson, to a new VP somewhere? Whatever that is, we've gotta take a look at the personality styles and ask what's not gonna work well in this transition process?

Not from a point of criticizing the daylights out of the next gen owner, but instead from the aspect of making sure that you're setting up the roles and the responsibilities correctly.

Do you see what I'm saying? You've make sure that the, the current responsibilities that are being taken care of get transitioned somewhere, properly delegated somehow to somebody who can do a great job with it.

So with that, what kind of training do we need to put into place? Is there things, you know, we, we've had great folks that have been put in CEO roles and president roles that have called us up and said, I need you to teach me how to do this role.

It's like, no problem, we got you. We'll, we'll cover that. You gotta look at the, the folks that are going to be running the business and ask yourself this question, are they trained to do what you want them to do?

We sure as heck shouldn't wait five years before we start some level of a training process. Now, do I think you need to train people up that aren't gonna be doing a job for five years? No, not at all.

But you're transitioning now. You're gonna start transitioning responsibilities and things. Let's start thinking with the, the clear step and clear expectation of training. What does it look like to train up a CEO? Can you do it?

Is it you know you as the owner? Can you get that person to where they need to be? Or do we need some outside perspective? Do we need some outside strength? Again, thinking about personality styles. Are they gonna do it the way that you would do it? Right?

These are all things you need to think about so we can get the training, invest into the time in training now so that we're not rushing the daylights out of this thing, you know, in the last year and trying to get somebody up to speed.

Don't waste your time on that. You can always look at your role as being something that you get to pull back. It's not happening for five years. The transitions in five years, great. You don't need to do everything you're doing right now for the next five years.

We can start changing things and finding some really good sweet spots that if we get the bigger responsibilities off of you, or more detailed responsibility, whatever it is, we can get those things transitioned and then allow you to focus your strengths and your talents on just a few areas.

Maybe you'll enjoy not having to work every single day. You know, maybe you'll take off a day or two a week and enjoy other things in life. I don't know. It doesn't matter. The key is if you'll stop and spend time thinking about it, investing time on the training about it, then you will discover, oh, I can take two days off.

Or maybe what you discover is, heck no. This gives me the opportunity to go rustle up bigger business, right? Make things better for the company. Who knows? But until you sit down and invest that time in the strategy of it, you won't know how to invest that time and training into the process.

Hey leaders, this is Joel Fortner, VP of Leadership Development at Chris LoCurto's Company. I have some questions for you. Do you as a leader, feel like you are caught up in a crazy cycle of stress and task that never ends week to week?

Do you ever have to deal with tough conversations with team members and you sit at home the next day, the night before, worried about how's it gonna go? What am I gonna say? What are they gonna say? Can I think fast enough on my feet? Is it gonna be a total failure?

Are you experiencing culture problems or stuff that just breaks down trust and unity on your team? Well, if you're, if you can relate to any of this, this is a pretty typical leadership story and situation.

Here's the thing, though, it doesn't have to be that way. And we can help you solve these things. We can help you become the leader that solves these problems and leads their team to greater success. I wanna introduce you to the Key Leaders Program.

This is an ongoing leadership development program that gives you the lesson track coaching and accountability. You need to become the leader you can become to actually implement what you're actually learning in this program.

Things fall apart without great leadership and intentionality. If you wanna solve the problems that are holding you back from being a great leader, we can help you with this program. Get in touch with Joel at chrislocurto.com.

Another big piece here that you need to possibly invest good time into, maybe some counseling. Like I said, next level life has helped many of the older business owners realize, oh my gosh, I can go do other personal things in life that I've wanted to accomplish.

It's helped other younger folks learn, oh, I could step up into this role. It's fantastic, but maybe you just need to go spend some time with a counselor. You know, maybe you need to spend some time with somebody talking through some of the emotional challenges.

You know, do you get so much of your worth from the role of owner, from the position of owner, from the position of CEO, from the position of the person who gets to make all the big decisions?

If you do, then I can promise you this transition will not happen in five years. It will probably take 10 years. You could put down a five year date, but the closer you get to it, the more you're gonna start holding everything close to the vest.

The more you're gonna keep pushing the importance of you being in the business and in that role, the more you're gonna find fault with that next gen owner, that they're not good enough and they're not ready enough for the role. The question is, is are those things truth or are they pride and insecurity?

Now listen to me. If you're that original founder, the original owner, you don't even have to be the original one. But if you're the current owner who's thinking of transitioning, you can't underestimate your ability to pull worth from your current role.

If you do, then it will sneak up on you a couple years down the road and shock the daylights outta you, and you'll be surprised at how unworthy you feel. Because what you'll start telling yourself is, you're no longer needed. The company doesn't need you.

There's all these lies that come in and, and truthfully, if we're transitioning and doing it, well then the company shouldn't need you because you're transitioning to a different part of your life, right? A different aspect of life.

But if your worth is tied to your role, if your worth is tied to your title, then you're gonna find it incredibly difficult to let go. So, insecurity will jump in, pride will jump in. Setting other people's reality will jump in in a very bad way. That's not pretty at all. It kind of sucks.

Conflict will start to happen. Disunity inside of the family will probably happen. So this is where you've gotta spend some time making sure that you are spending time with somebody who can help you to understand those aspects, to help you to see that you have greater purpose beyond the role that you've been in.

You have greater purpose than the ownership of that role, and that there's great opportunities for you as well. So make sure that you're digging in and investing time in that, even if it means sitting down with somebody.

And a lot of you older dudes, I understand it's tough for you to go get counseling on something like, oh, I don't need a counselor. I don't, I don't need to talk to a, you know, a head shrink. That's not what we're talking about.

It's spending time talking through things with somebody who's not trying to shrink your head, but instead trying to help you make great decisions and discover where this, where this is coming from, where this insecurities is coming from, where the struggle is coming from.

Again, hit Next-Level Life. It'll blow you away, and it doesn't just stop there. Think about the kind of training that you need.

Maybe there's financial management. Have you trained this next gen owner to understand all of the financials? That's gonna take some time? If they've never been in the P&Ls, if they've never understood the budgeting, the forecasting, if they've never understood what assets you have, what that looks like, cash flow.

If they've never understood those aspects, man, you got a, you got a, you got a lot of time that you're gonna need to put into them, right? Maybe it's you, maybe you get somebody else to do it, but that's gonna take some time.

How are their leadership skills? Are they a great leader? If not, are they going through any kind of training process that's going to help them become a great leader?

How are their operational procedures? Do they, do they understand how the business operates? Listen, you don't have to know every aspect of the business. I don't anymore. It's been a long time since I've raised up great leaders.

There's so many aspects of the business, I don't even know. I don't, there's some aspects I don't wanna know because I'm too bogged down with the things that I'm doing to make this business better, right?

To grow this business, to support my leadership, to make them better, right? But do they understand the operations of the business? Do they understand the important processes?

Do they understand the things that might be holding them back? The more that you spend time in well led training on these types of skills, the greater the continuity of the business operations are gonna be.

But on top of that, and this is going to matter to you greatly, the more time you spend, the more money you invest on getting this next gen owner or even a leadership team up to speed, the greater retention of the business's core values, the greater retention of, my gosh, what's so important? The business culture.

If you spend time and most likely money investing in the next gen owner, the next leadership team, you know, those that are gonna step up into roles, the more that you do this, the more your baby, the thing that you've been focused on for so long, the better it's going to be at retaining the culture that you have set.

Even if there's some aspect changes, it's gonna be good culture, not crappy culture, because it all starts to fall apart because these people weren't trained well. So for me, that's vitally important. I mean, that's a must.

I couldn't stand by and watch the culture of my business tank like crazy because I didn't spend time making sure that the people running it actually knew what the heck they were doing.

So if I can sum this up in investing in time and training, no matter who it is, whether it's the, the next gen, it might be even be you.

Maybe there's things you need to learn now, you need to be trained on now, so you can train on it over the next five years. It could be the, the next gen person stepping into the role that they're stepping in as owner, CEO, president, whatever it is.

It could be the, the leadership team that we need to build underneath this next gen owner under. Here's the thing that I would love to summarize in this. Invest in mentorship.

Make sure mentoring is happening you to the next gen, next gen, to the leaders that are stepping up. Get outside perspectives, outside training and mentorship.

Don't do what so many people do, which is hand off the business and then get really frustrated. I, you, you probably know a few people that have done this, that sit there and talk about how bad their child is running the business, and yet that child did not get great mentorship, whether it be from the previous owner or outside sources, whatever.

It's, so, if you want the handoff of this business to go incredibly well, make sure that you're investing time in training. Next thing you need to do, and I, I am never gonna be somebody who thinks legacy is greatly important, right? For me, the legacy that I want to leave is God's legacy through me, right?

I don't want to leave, I, I shouldn't say I don't want to. I'm not focused on leaving the legacy of Chris LoCurto. That's not my focus.

What I do want is when people think of me and any legacy that's attached to me, that it was focused on God, that it was about God in his will and his ways in relationship with him, and the kingdom of God and you know, how did I push people and help people to get into that very kingdom and guide people to better relationships and better parenting and better leadership and, you know, businesses that are not just money focused, but people focused and hopefully kingdom focused as well, if possible.

So, I say that focusing on the legacy, not just the business itself, but what does that really look like and what's the importance, what's the significance of passing down a family business? Right?

So again, let me go back to my five-year-old, if the, this other business that, you know, we're discussing now, not because we're actually taking action steps on it right now, just our goal of what happens when just discussions.

If she got to a point where she was like, this isn't important to me. I just wanna make a bunch of money, then that's gonna really help me maybe make a decision of just sell the business off. Give her a bunch of money.

She can go start something new. You know, maybe she wants that business because she enjoys the, the one aspect of it. Okay, that's fine too.

But if I have a, a next gen owner, a child of mine who is looking at this and saying, Nope, I want to continue this legacy that you've, you've put together. You know that God has worked through you and I wanna make it amazing.

I want to continue doing the thing that you're doing, then I need to work my butt off to ensure that the values transfer, that the traditions, the mission, the sense of purpose, the, the reason why the business exists, that transitions, that transfers down, that those are passed down alongside with the business itself, right?

It is incredibly important to not just teach how to run a business, but how to treat people, how to serve people, how to know what your purpose is, how to fulfill that purpose, what you should value or what I value in the things that I think you should value and discover the things you do, value the traditions that we've set up inside of the business.

All of that, preserving and nurturing of the, the family legacy is important as well, because that will carry with it a reputation that will carry with it a, a, a trust and a loyalty factor with clientele that will help that next gen be successful. Okay?

Folks, that pretty much is all the time that we have for today. As we think about passing our, you know, our small business baton to the next generation, it is crucial to tackle this with a really smart game plan and a whole lot of heart, right?

Please don't just wait to dump this over and hope that everything goes well. Please don't dump this over and then criticize the daylights out of, you know, the next gen owner on this because they didn't get proper training and they don't know what the heck they're doing.

Let's take the time. Don't plan on a one year transition. Don't plan on a two year transition.

You know, if possible, let's give this as much time as we can and as much time as needed, and put together a phenomenal strategy with clear goals, clear steps, clear expectations, clear timelines, you know, all the things that are needed, all the trainings that are needed, all the emotional stuff that we need to work through.

All of the communication pieces, the accountability pieces that we need to work through. Let's put all of that together. You, you're not gonna do this in a day. This is gonna take time to put this, this strategy together to get the steps right? Let's put that together and execute it phenomenally well with a whole lot of heart. Okay?

Alright. That is the time that we have for today, by the way. Next episode is gonna be the don't the things you shouldn't do in this transition process. So come back and, and run through that process with me.

Folks, as always, take this information, change your leadership, change your business, change your life, and change your legacy, and join us on the next episode.