GrowthForge: Field Notes #14

Three out of ten Australian SMEs survive the first transition of ownership. Fifteen out of a hundred survive the second. These are the numbers I started with in 2018 when I set out to understand why the businesses that employ most of the country do not live past their founders. I wanted to know whether the surviving ones were doing something different, or whether the failing ones were doing something specific wrong.

The answer, it turned out, was neither. The surviving businesses had four things in common, and the failing ones were missing those four things in roughly the same proportions. The research surfaced them not as a list of tips but as a cause-and-effect diagram. Four themes, each sitting underneath a specific kind of founder behaviour, each one leaving its fingerprints on the business.

The first is trust. Not trust in the abstract — trust in the specific person or team who would have to carry the business forward. The finding was sharp: when a founder did not believe in their successor’s capability, zero percent of those businesses had a formal exit plan. When the founder did believe, forty percent did. The size of the swing told me this was not a soft factor. It was the factor.

The second is personal resources. This is the one most advisors focus on, and they are right to — it matters. The surprise in the research was that it was not about the dollar amount. It was about the founder’s felt sense of sufficiency. Two founders with identical financial positions could feel completely differently about whether they had enough. The research correlated exit plans with satisfaction with financial resources, not with the balance sheet. The subjective measure moved. The objective one stayed put.

The third is identity. This is the theme most practitioners avoid because it is harder to fix than a spreadsheet. A founder whose sense of self is fused with the business does not have an exit problem — they have a continuity-of-self problem. Writing an exit plan feels, in some real way, like writing a letter from a future in which you no longer exist. The research found the correlation clearly: founders with high psychological ownership of the business were the least likely to have exit plans. You do not reason your way out of this one. You rebuild the identity.

The fourth is unconscious incompetence. The one Dunning and Kruger named. The founder who does not know what they do not know about exits, because they have never done one. Most founders exit exactly once. The first time is also the only time. In every other domain of their professional life they have learned by doing; here, there is no prior attempt to learn from. The research surfaced founders who had read about exits, talked about them, and still held a mental model of the process that was roughly thirty years out of date. The gap between what they thought they knew and what the process now requires was often the single biggest barrier, because it was invisible to them.

What the research also showed is that these four themes do not stand alone. They compound. A founder without trust in their successor develops more psychological ownership to protect against the perceived risk. More ownership produces stronger identity fusion. Stronger identity fusion produces avoidance. Avoidance produces unconscious incompetence. By the time the founder looks up, the business has organised itself around all four, and the exit is harder because the business is less transferable, because the founder has held on.

The work of becoming exit-ready is not one conversation. It is the systematic undoing of each of these four fingerprints, in an order that respects how they feed each other.

That is what GrowthForge™ was built to do. Stability for the operating truth. Execution for the delivery discipline. Tempered Together for the culture and the trust that fix the first theme. 

TurboForge for the strategic direction that makes identity-outside-the-business conceivable. The four engines are a direct response to the four themes. They were not designed that way deliberately. They arrived there because the underlying problem is the same.

If this sounds like your business, the Diagnostic is where the conversation starts. It names which of the four is carrying the most weight for you right now.

Start here: