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Will Your Successor Be a Caretaker, Innovator or Empire Builder?

October 9, 2014

Businesses reach a point where they can no longer be maintained by the present owners and leaders.  If that is not recognized, then the leaders will work until they drop.  No problem for them.  Their heirs will dispose of the business in some manner and take what they can get for it. 

If the present owners realize they cannot handle it forever, no longer want to and do not feel they have people who can carry on afterwards, they can sell it.  They will be exchanging the continuing income from the business for the sale proceeds and a substantial part of their life, i.e. time, they can use for other endeavors.  However, if they want the time, continuing cash flow and eventual sale proceeds they can transfer the business to successors.   One question to consider is the type of successor the business will be trusted to.

Certain businesses can continue without the original guiding force.  Those continuing it can include key employees, long time consultants, a child or grandchild, spouse or a group of these people able to work together to continue the business.  This is particularly important if the owner dies suddenly without prior plans being made. 

Even with careful plans and a successful transfer it is still difficult to assess beforehand what type of new owner will take over.  Will they be a caretaker, innovator or empire builder?  I have seen all three (and many others) and under the right circumstance, each type of person can be appropriate.  For instance, a caretaker can maintain a business and its cash flow and while not expanding the business, can work to maximize the earnings, streamline production capabilities, increase efficiency and improve product or service delivery and customer service.

An innovator will look to grow the business and be willing to assume measured degrees of risk.  They might need additional financing and while trying to expand the business might not pay as much attention to the details a caretaker would losing opportunities that might be easier to achieve.

An empire builder is usually someone using the business as a stepping stone – something that makes him a player.  His interest might be much less than either a caretaker or innovator.  This business is just the ante in the pot for bigger gains.  These feelings can sometimes be latent in employees who bide their time for an opportunity they crave but do not usually feel will materialize.

Everything in business needs care, consideration, careful planning and the upmost thought.  There are many ramifications and nothing should be overlooked, especially the type of successor.

One Comment leave one →
  1. 6hawthorne permalink
    October 9, 2014 1:28 pm


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