The Seven Deadly Sins of Transition: A Series

By: John Hotson,
Business Transition Alliance Co-Founder

Deadly Sin #4: Know Your Customer

In the first three articles in this series we talked about how owners who have built up a successful business have worked hard on seven good habits that have served them well in developing their business. Now however they need to undo and rework those good habits if they are to successfully transition the business, either through a sale or hand-off to family.

The fourth habit that owners have to rework is “Know Your Customer

Know Your Customer

You’ve built up your business buy attracting one customer at a time. It was a hard fought battle to get and maintain those customers and in a lot of cases you may have a personal relationship with them. That’s great for a business that you run on a daily basis, but not so good when you want to step away.

The process of handing over customers to a successor takes time. Your impulse will be to do things the way they’ve always been done. Your customer’s impulse will be to call you at the first sign of concern.

At a time when a new team is taking over, rather than you being the main point of contact you need to learn to “Ignore Your Customers!

While this may seem a bit harsh, and obviously you need to take this in stages, at the end of the day if you can’t effectively train both your successors and your customers to transact business without you, you will never be able to leave your business. And without a well thought through process of handing off customers you are putting the future of the business at risk.

Six Steps

  1. Involve your successor. It’s crucial that you have your successor participate in discussions and meetings with larger clients throughout the transition. Junior partners are typically brought on initially to handle smaller accounts, and while this is fine in the beginning, it doesn’t give them the proper experience and training required to serve the bigger clients.
  2. Think about culture. You should consider how your successor will fit in with your clients and their employees, and how their management style may be different.
  3. Review the financials. Transitioning your business doesn’t mean simply teaching your successor to handle clients. You must provide guidance on issues such as the profitability of each client, the most profitable client size for your firm and cost management.
  4. Get help. Don’t try to manage the transition on your own. Instead, involve the appropriate consultant and delegate responsibilities to them during the process.
  5. Be open to change. You need to accept that some parts of your business may change when your successor takes over. The sooner you come to terms with this, the better.
  6. Don’t delay. It can take years to introduce a successor to your business and provide him or her with the training and resources necessary to keep the business going.
  • Reference:
    • Barron’s Advisor Centre
    • Exit & Retirement Strategies in Centennial

Next 30 days: Identify a customer that you think would be a good fit with each of the individuals in your company who you plan to transition customers to. Have a conversation with each employee about how they would handle the transition and determine if the fit will be a good one for both employee and customer.

About John Hotson:

John is a seasoned marketing and communications professional. He has worked as both a business owner and advisor to owners who are committed to improving the value of their business. John is a co-founder of The Business Transition Alliance.


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