advance of the event itself but, according to our research,
that’s one of the areas where small business owners tend
not to focus. Often it’s almost like small business owners
are reluctant to think about that level of detail.”
Theodore Homa, senior partner, international consulting service at the Business Development Bank of Canada
in Montreal, says the transition stage is an uneasy time for
a business because the seller and new owner have to ease
the fears of employees and stakeholders.
Proper communication with stakeholders and employees is key to keeping everything under control during the
transition period, he says.
“If I’m your client and buying from your business, I don’t
want to think that there’s any risk that you might not be
able to supply to me. If I start feeling that there’s a risk involved and I might have my supply interrupted, that kind
of opens the door for the client to start shopping around
and that’s the last thing you want to do—create that risk
of losing market share.”
Homa suggests sellers and buyers prepare a strategy for
transition well in advance of announcing the deal so that
stakeholders are kept in the loop.
“You do it well in advance so you avoid those bumps in
the road that could cause your clients or suppliers to start
to question whether it’s a good business partner for them.
You want it to be business as usual and nobody notices any
change. The important thing is to plan ahead.”
It’s essential to inform workers about a business transition as soon as possible after the sale is made to get employee buy-in, Homa says, because if employees aren’t
kept in the loop they can lose their engagement and begin
spreading negative rumors about the business.
“The first level starts with the employees internally.
You’ve got to make sure that they’re engaged and they understand why this is happening and that they’re part of the
solution. There’s a lot of coaching involved by the owner,
guiding the employees and getting their buy-in.”
Failure to engage employees is a recipe for disaster,
says Homa.
“If you’re a sales rep for the business and you don’t believe in what’s going on you may tell your client that your
boss is selling, and you don’t like what’s he’s doing, and
that creates a doubt in the mind of the client. Word gets
around and people start having second thoughts about it
being a business they want to have as a business partner.”
According to Wilton, the biggest mistake sellers
and buyers can make once a transition gets under
way is not communicating properly with both employees and stakeholders.
The two need to work together on a communications
plan because uncertainty will kill any business, he says,
noting that such a plan must strike a balance between
maintaining confidentiality and disclosing a reasonable
amount of information to ensure stakeholders the business is stable.
“I’m not talking about telling the whole world
here. I’m just talking about telling the right people at
the right time.” END
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