Helpful definitions for planning and discussing your business transition

You may find the following definitions useful in creating a common language among those who will be involved in transition related discussions:

Chief Transition Officer – The person responsible for coordinating, coaching, motivating, and advising the founder, the management team, and the family to create a successful business transition

Business Management System – A system that is developed to allow a leadership team to take responsibility for operating the business from the founder.

Exit planning – The planning done by a business owner to prepare for the sale of their business to a 3rd party

Family Unity Plan – A plan and a process for how a family communicates and works together to achieve a shared vision for the use of the family wealth

Guiding principles – The basic beliefs and philosophy that guides many decisions in the transition process

Leadership – The ability to help an organization identify and realize a shared vision through personal mastery of communication and motivational skills

Management – The skills and abilities to coordinate and organize people around their daily tasks to achieve the goals set by the organization

Management Succession Plan – A written plan for identifying the tasks and responsibilities that a key leader needs to delegate to someone else in order to move up or out. It also identifies who will be the successor to this leader and the training and coaching process that will be used to prepare them to move into this position

Passive Owner – An owner that has released their responsibilities for operating the business and is now only acting as shareholder/investor

Ownership – The legal possession of an asset like a business which includes key financial goals and objectives

Ownership Transition Plan– The legal, financial, and tax planning that needs to take place to actually transition ownership from the founder to others

Small Business – A business with 30-40 or more employees with a management team responsible for coordinating and organizing the daily activities of the business

Small Business Owner – The primary owner of a successful small business and is often the founder

Stakeholders - Anyone who has something to gain or lose either during or after a leadership change: family members, employees, vendors, advisors, service providers, bankers, insurance agents, suppliers, contractors, etc.

Strategic plan – The work to create and communicate the long term vision and action plan for achieving it

Succession planning – The process of identifying the successor and preparing them to assume the role being vacated by the existing key leader or manager.  This can apply to both the business and the family

Transition– The process of change that is required to help the owner move to a new level of success and involves both management succession and an eventual change in ownership involving a sale, gift, or inheritance

Transition Adviso – A professional who provides expert advice and counsel to a founder to assist them in creating a Transition Plan

Transition Options - (employee/family/buyer) – The options an owner considers when they are planning to transition their ownership through a sale, gift, or in