Like all entrepreneurs, there will come a time in your life when you feel the need to exit your business. Whether you’re retiring, burnt-out, or you receive an offer you simply cannot refuse, having a business succession plan will ensure that you successfully pass the torch to the new owner. If you don’t already have a plan in place, get started today by considering these must-ask business succession planning questions.
When it comes to business succession planning, there are no one-plan-fits all strategies. Ask these questions to prepare a plan that’s right for you!
First and foremost, your business must be able to operate without your presence. In order for a successful succession to take place, the next level of management must be assessed, operations must be fine-tuned, and the strategy must be defined.
Next, consider who your successor will be. The five most common parties to transfer ownership to include:
While there are pros and cons to each of these succession plans, consider which method will be most beneficial for you, your family, the employees, and your successor.
Understanding the value of your business and its growth potential is one of the most critical steps in the planning process. Unfortunately, most business owners are unable to look at their businesses objectively– and understandably so. When you’ve spent years building a business, the value can seem exponential.
To determine true market value, it is best to hire a third-party to perform a business valuation. With a professional’s valuation of your business, you can rightfully defend your asking price to a successor.
Consider what the transfer of ownership will look like after the sale of your business. Many business owners commit to staying on the payroll for a set period of time to ensure business operations are smoothly transitioned to their successor. When planning your succession, determine how long you’re willing to continue working and develop a strategy to transfer responsibilities to the new owner.
Another important step in the business succession planning process is considering what you want to do after the sale of the business. Consider how you will fill your time, as well as what financial resources you will need to support your new lifestyle.
Business succession planning requires careful consideration and preparation. Ensure a smooth transition and equitable deal by working with a professional business broker to develop a customized plan. To get started, contact Sunbelt Business Brokers near you to set up a confidential consultation.