Let’s face it: you’re not going to work forever. At some point, you’re going to want (or need) to pass the reins of your business to someone else.
If you have a sound succession plan in place, the transition from business ownership to retirement will be smoother. It will also set your company up for success without you leading the charge.
Here are ten things you should consider to help create a successful business exit strategy:
1. Identify your specific objectives
Preparing a business for external or internal sale is completely different from steadily transferring ownership of the business to a business partner. Also, consider the time horizon for your departure. A two-year plan will be very different from a fifteen-year roadmap, for example.
2. Write out a detailed plan
Putting your ideas down on paper will help you see things more clearly - and you’ll have a record of your specific goals. When composing your blueprint, consider the when, what, who, and how variables. Remember that succession is a process rather than an event, so think of it as a journey that’s changeable rather than something that’s cast in stone.
3. Succession planning should be done earlier rather than later
Five years before you plan to leave may be too late. As per tip #2 above, an exit strategy is a journey that takes a considerable amount of time—if done correctly.
4. Continue investing in infrastructure and technology
While you’re still at the helm, make sure you continue growing your business. By investing in infrastructure and new technologies, you’ll be improving the company while simultaneously reducing your role in it.
5. Don’t forget your own team
Finding the right person to take your place can be an arduous task. Identify people on your team who share your vision for the company.
6. Be sure to have a business valuation conducted by an experienced valuation expert
Whether you’re selling the entire business or just exiting, you’ll need an accurate idea of what the company is worth. Be sure to consider whether a full business valuation or calculation of value is needed.
7. Construct an arrangement that will allow you to remain influential in the business
It’s possible to walk away from day-to-day management while still having a voice in how a business is operated. Establishing such a system now will help to make your continued presence a reality.
8. Formalize and communicate
Whatever game plan you come up with, make sure you formalize it and then communicate it.
9. Bring legal, financial, and tax professionals on board
There are many hurdles to overcome when transitioning out of a corporation or small business. Having a team of experts will help ensure all aspects of the transition are considered and factored into your decisions.
10. Be psychologically and financially prepared to step aside
How much do you need to sell your business for to reach your retirement goals? Financial planning can help answer that question, making your exit as stress-free as possible.
Are you ready to begin developing your own business succession plan? Contact a business consultant at Glass Jacobson today.