It’s never too early to start thinking about how you will exit your business.
Here are 6 key considerations for your strategic planning that will yield the best chance of achieving your goals.
- Consider who you want to take over your business – family, employees, third party sales.
- Clarify what is important to you – keeping the business in the family, protecting your legacy, protecting the employees, maximizing value, maximizing cash, or confidentiality. Often these can’t be achieved so it is important to prioritize.
- Review the corporate structure with your advisors and make changes well in advance of any transition to maximize the tax advantages.
- Prepare the business to run without you to ensure that the business thrives after the transition.
- Understand how much your business is worth. Basically, the value of the business is what the purchaser will pay, not how much you need to retire. A business valuation is an estimate of the value, often based on a multiple of earnings before income taxes and depreciation which has been adjusted for the business owner’s and family perks and economic wages to replace key management.
- Transition when the business is doing well. What we have witnessed is the ramifications of what happens when a business owner wakes up one day and says “I am done!”. The business suffers from lack of passion and leadership which results in poor morale, service and ultimately profitability while the disengaged business owners urgently tries to unload the business. By leaving before this happens, your legacy and value are better protected.
Let’s have a discussion about the future of your business. Our team will help you develop a succession plan that considers all your business, family and financial desires so that you can exit the business the way you want to. Contact Bonnie firstname.lastname@example.org or Deanna email@example.com