plan your endgame

Explore what’s involved in creating a succession plan for your business.

Consider:

  • Who will take over your business some day? Members of your family; a partner or key manager; an outside entity?
  • How do you want to transfer the business? As a gift to family members, sell it, or some other strategy?
  • Do you want a future role in the business or any ongoing benefits?

How to plan your endgame

  1. Start early and allow five years or more
  2. Deal with family expectations
  3. Groom a successor
  4. Write a succession plan that includes who will take over, the method of transfer, and your future role.

If you want a future role in your business, determine how you will ensure that your successors don’t dismantle or disband the business after the deal is done.

There are a variety of transition or exit strategies you might consider. As you compare them, it’s crucial to consult with your legal and tax advisors.

have a professional evaluation

Discover a way to determine how much your business is worth.

When it comes time to transition your business, ask yourself the fundamental question: “How much is my business worth?”

To answer accurately, you may need a professional valuation to get a documented statement of your company’s worth. Each business is different and every valuation is somewhat unique.

how much is your business worth? information gathering, appraisal variables, valuation technique, reporting

A professional in business valuation will examine everything from your company’s management team and financial performance, to its competition and prospects. The report will explain the valuation technique used, any assumptions made, and how they reached their conclusions.

maximize your return

Most successful businesses go through four stages: startup, growth, maturity, and transition.

That’s right. And the maturity stage of your business is an ideal time to start planning what you’ll do in the final transition stage. Will you close the business? Sell it? Pass it along to your children?

Whichever path you choose, it’s critical to start planning early. Surveys of financial planners, CPAs, and other business professionals have shown that it takes at least five years to create an effective business succession plan. Yet, only about 25% of all business owners do an adequate job.

And you’re probably very busy. Succession planning takes time you may feel you can’t spare. But when you consider all of the time, effort, and dollars you’ve contributed over the years, your business may be your largest single asset. By taking the time to determine your business’s future plan, you can maximize your return on investment.

Keep in mind that if you don’t take the time, you’re basically guaranteeing that someone else will make those decisions for you.