Most private business owners wear two hats. One is the "Owner" hat. The other is the "CEO" hat. And Chuck Richards, CEO of Chairman's View, a business valuation consultancy, says the key to effectively passing any private, often small business from one leader to the next requires a strict ownership focus on building the transferable value of the enterprise.

First, Richards advises business owners, you must think like an owner, and to reach your goals for the eventual transition of the business, you must:

1. Define success
   
   
2. Assess the transferable value of the business asset
   
   
3. Take measurable action
   
   
4. Create better options

Listening to Chuck at a recent conference, I was interested to learn that most private businesses will never sell when they are taken to market by founders and owners who want to transfer their business value into a retirement account or trust for family members. That's because they don't often act like owners. Instead, many allow themselves to get mired in the day-to-day firefighting associated with their concurrent CEO duties.

But reflecting on Chuck's bullet points, as noted above, I was immediately struck at how they resonate for any business owner or CEO interested in creating the optimum succession options for that eventual transition of leadership responsibilities.

Defining success in succession terms requires a continuous assessment of where the business is going, the leadership behaviors it requires and what success in a critical role within the company really looks like.

Assessing the transferable value of management leadership is also key. It's not enough to find someone with the requisite experience for a senior executive role. It's incumbent on any company to sort through the decisions a potential management recruit made or failed to make that impacted their current or former employer. The mere fact that someone occupied a certain role previously doesn't necessarily mean they contributed meaningfully to that organization's success. In fact, the organization may have succeeded despite their impact as a leader. So what, then, can we surmise about that individual's fit with a new organization?

Taking measurable action on any company's succession agenda requires an appetite not only to recruit the best, but also to remove bad actors and bad apples before they ruin the bunch. Too often, business leaders delay the removal of someone who doesn't fit until it's too late.

And lastly, what Chuck prescribed for business value transfer also speaks directly to the goal of succession planning. Working proactively to identify leadership candidates and patterns of positive managerial behavior does give the business owner and business executives the best options for effective transition. But it only works if you do your homework before the need arises.

Joseph Daniel McCool
Joseph Daniel McCool is senior contributing editor with ExecuNet and principal of management recruiting/succession advisory firm The McCool Group. He is also the author of Deciding Who Leads: How Executive Recruiters Drive, Direct & Disrupt the Global Search for Leadership Talent, recognized widely as "one of the best business books of 2008," and its Brazilian Portuguese translation, Escolhendo Líderes, published in June 2010.

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