The Change Management of Buying a Small Business

Transitioning a small business from an exiting owner is a moment of disequilibrium that requires preparation and management like any other major change. While disequilibrium might have negative connotations, it does not have to be bad – there are many great things that can come from a change in leadership or vision. However, failure to address the imbalance and recognize the tension it creates for the team is bad for the company. When we look at change in a small business, we use the below small business change management framework to help the business stabilize and grow through the change in ownership.

Most change management addresses strategy. That’s important, but we believe that the communication of change to address the emotional concerns of employees is even more important. Why? Here’s a good explanation from Harvard Business Review’s Survival Guide for Leaders (lightly edited for clarity):

[The] thwarting tactics [of employees resistant to change] —whether done consciously or not—grows out of people’s aversion to the organizational disequilibrium created by your initiative. By attempting to undercut you, people strive to restore order, maintain what is familiar to them, and protect themselves from the pains of change. They want to be comfortable again, and you’re in the way.

Said differently, the best strategy will mean nothing if your new team is undercutting every step. We believe execution is the number one ingredient to success in a small business (see our three small business CEO leadership principles) and thus any barriers to execution should be addressed purposefully. Our change management process for small businesses as a reaction à response framework that addresses the short-term and long-term issues that might arise during a small business transition.

Short-Term Change Management Tactics

• All-Hands & 1-on-1s: Start by holding a meeting with the entire team or in a few groups to get introduced and share your excitement. This is an opportunity to address concerns and identify detractors (more on detractors below). Then, schedule one hour 1-on-1s with as many as the team members as you can handle. The more members of the team you can meet, the better sense of the organization you’ll have and the better sense of you the organization will have.
• Scheduled Sharing: A cadence of sharing information to the team creates openness (which fosters trust), but also keeps management on task with communication. Create a cadence of when information is going to be shared and be sure to stick to that cadence, even if there is nothing to be shared at that time. Example questions to answer:
  • Here’s what we know now.
  • Here’s what we don’t know.
  • Here’s what we are working to understand.
  • Here’s what’s next.
• Engage Detractors: Detractors can sink any change and getting them on-board is tough. The first step is to engage them in a dialogue and actively listen to their viewpoints. Have coffee once a week with your most ardent detractors and acknowledge the pain/loss that change creates for them. Be vulnerable (i.e., it’s ok to admit that the changes might not work or are unproven) to connect on a human level and work towards a shared vision of success that they can help execute.
• Empower Fence-Sitters: Fence-sitters are waiting to see which way the wind blows and can become promoters or detractors. It is often a large part of the employee-base at the start of a transition. To bring them to the promoter side, empower them to execute small wins based on feedback from meeting with employees. Empowering the fence-sitter to provide value to the team shows your trust in their execution and the positive outcomes your leadership creates.

Long-Term Change Management Tactics

• Set a Vision: A vision is a simple and distinct glimpse into the future state of the business that gives the team a direction to pursue. There’s a lot of great writing on how to set a company vision (we like this article), but what’s important to remember is that it should be believable and inspire to create positive emotional responses from the team. Failure to do this will undermine any growth efforts.
• Make a Culture Book & Totem: A culture playbook acts as the guard rails in the company. It gives existing employees a model to point to and helps to orient new hires. This can be reinforced with a totem as well. Consider creating a small object that symbolizes your values and using it in meetings and around the office to physically remind the team of the new culture.
• Promote Change Agents: Push responsibilities to members of the team to give them not just ownership of the project, but a chance to make the vision their own. If people become owners of the change, they own their successes and thereby the successes of the vision.
• 5X Comms Rule: Not a tactic, but still important, is the five times communication rule. In any moment (and in any medium), it is important to repeat the vision and strategy for the business. Your communication target should be to share changes at least five different times in five different mediums to make sure it sticks. Never expect anyone to get message after sharing only once or twice.

For these tactics to be executed successfully it is important to actively listen, address concerns, and adjust. That’s not to say that adjustment of strategy or tactics is always necessary but hearing and responding to concerns of team members brave enough to bring them is critical for building trust and adoption.  Even if there is no change to be made, it is important to be open and honest with your team to show that they are as much a part of the process as you and the rest of management.

If you think that the Endurance Eagle model for change management in small businesses would help your team in transition or you’d like to learn more about selling your small business to Endurance Eagle, please contact us.