How to Prepare Your Business Succession Plan or Business Sale
Sooner or later every business is sold, shut down, or given away. Most of us didn’t think about that when we started our new and exciting venture. Yet, at some point our interests start to change and our enthusiasm and energy for the business wane. At this point developing a succession plan or exit strategy for your business is key. The business succession plan might include M&A, business valuation, business acquisition or other strategies
If you are reading this article, you are at least starting to think about the possibility of your life going on without your business. Keep thinking about that. When you started your business you had a plan. It may not have been written down, but it existed. This plan probably did not spill over to, or include, your personal life because the entire focus was on getting the business going and then growing it. At this point, you should try to develop a plan that looks at what you want to do next and how you will get there. A few critical questions you need to answer are:
- Where are my interests now and where will they be in five years?
- What do I get enthusiastic about?
- What are my priorities regarding my family (or families in many cases), key employees and other people I am close to?
- How long can I, or will I be willing to, continue to put forth the energy to lead my business?
- Am I looking to sell because times have been tough? If the market for my product turned tomorrow would I reconsider selling?
- Besides the highest price and lowest taxes what do I want from the Buyers?
- Do I want the business name to live on?
- Do I want the real estate renovated?
- Do I want the employees treated well?
- Do I want future involvement?
- Do I want my children or other family members to stay involved?
- How do I handle fairly one child who is active and another who is inactive in the business?
- Financially, what do I need to survive?
- Who can best help me answer these questions?
These are not easy questions. The correct answers may take quite a while to arrive. And, by correct answers, we mean the answers that are correct for you. These will vary greatly from one owner to another. It often helps to talk it out with people you trust such as your spouse, CPA, attorney, business coach, clergy, therapist, life-long friend…..or a combination of these. Quiet reflection also helps.