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Mike's Intoxication With Control Hurts Bill

Updated: May 28

When succession planning is not a priority, it is not unusual for entrepreneurs to leave succeeding generations of leadership a legacy debt. This debt can hamstring the future of the business.

Debt is a big reason why over eighty percent of businesses fail in their second generation of leadership.

Mike founds a company with two partners. For forty years, the company grows and is prosperous. The two partners pass away, leaving Mike as the primary stakeholder.

As is often the case for first-generation entrepreneurs, control is an issue for Mike. Controlling the business is his identity. He has lived it for most of his life.

The excessive need for control is always intoxicating. This intoxication blinds entrepreneurs from acknowledging their responsibility to fuel the succession planning process. And when entrepreneurs don't own the succession planning process, businesses in their second generation of leadership fail.

When Mike's health fails, his son-in-law is passed over. Bill, a third-generation leader, takes control of the business as president.

Mike's controlling interest in the company, which is significant, must be bought from his estate. Purchasing the stock from Mike's estate without any preferred consideration is extraordinarily expensive for the business.

Bill is forced to go to the bank to get the money to buy Mike's stock from the estate. It adds a significant load of debt to the business. The debt is so large it must be amortized over many years. In reality, it is far more than the company can afford.

That was twenty-four years ago. The company is still saddled with the debt.

Debt has been a significant hindrance to growth in the business. Needed investments in the company have been tabled for all these years. The company has limped forward, reaching nothing close to its potential.

Business leaders are stewards in a relay race. Four things must be valid for them to win:

  1. Trust - Runners must trust other runners on the team

  2. Speed - The runners must be fast

  3. Baton Pass - Runners must pass the baton at top speed

  4. Handoff - Successful handoff is the key to winning

As a relay team member, Mike is a fast runner, but he doesn't hand off the baton to Bill at top speed. Intoxicated by control, Mike, as founder, hamstrings the future prosperity of his business by not owning the succession planning process. Bill and the company pay a steep price for Mike's decades-long need for control. It is a penalty that could have been avoided.

Is this an issue in your life? Will succeeding generations of leadership at your company pay a steep price for your intoxication?

My heart genuinely burns with a passion for helping you avoid the intoxication resulting from an excessive need for control. I want your business to make a profit, bless its community and advance its purpose in the world. Don't let the need for control keep that from happening.

To help you overcome control and fuel the succession planning process, I have created an asset, Fourteen Questions To Fuel Succession Planning Conversations. It is my gift to you. The sooner these conversations happen, the better for everyone involved. CLICK HERE TO DOWNLOAD.

Harry T. Jones

*Like all my stories, Mike and Bill's story is real; names and some particulars are changed to protect the individuals involved.

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