Succession planning in general is the process of preparing to hand over control of the business to others. Very often family may be part of succession planning and while most businesses do not have any plans for business succession, those that do, fall short in the planning and communication of those plans.
So you are working hard on your business now, what is your plan?
- Build up your business to a nice size and sell your business for great financial gain?
- Pass your business on to your kids
- Arrange an LBO for key employees
- Work your butt off, make enough money to pay your bills and do this til you are no longer on this earth.
- other
We are all busy running and or growing our businesses, but last week a few business owner did consider this issue important enough to take a few hours out of their day to attend this workshop and begin understanding the process.
Presenting at this workshop were an Attorney, a CPA, an insurance provider, and myself. This seminar was attended by local small business owners seeking knowledge on this topic. What I found most interesting was that the Attorney, CPA, and I spoke on many of the same issue regarding selling your business. We all spoke for about 1/2 an hour and didn’t coordinate on what we would speak on. While we touched on the the different aspects surrounding business succession, I found we spoke on many of the same points, but due to our professions we spoke on those point from varying perspective. When discussing seller financing for your business, the attorney spoke of the need for extreme caution when setting up seller financing, and additional care extended when family or fiends involved. The CPA spoke to the proper records to be kept to document what you have and be able to show what you had in the way of your companies performance. My discussion regarding seller financing addressed the prevalence of seller financing in the marketplace and the need to be able to offer it to help make a deal happen in to days tight credit market.
A few key points from this workshop:
- Most businesses do not have a succession plan.
- Planning is the most important first step.
- Seller financing can help facilitate a deal but one must do proper due diligence.
- Relying on your business as your only source of retirement funds is dangerous and mis guided.
- When doing your annual reviews of company numbers or tax preparation, use that as a good time to look at other matters as it relates to your bigger picture
My suggestion is between handling your accounts receivables, accounts payables, other office paperwork, social networking, working with clients, and returning phone calls/emails, take a moment to consider what your exit plan may be. Even if you just give the subject a few moments of thought, you may find yourself ahead of most or your peers and fellow business owners.
Also, the Internet is a great source of information on business succession and other business matters, but also keep your eyes open for the various seminars, workshops, and expos that may be in your area. They are not only a great source of knowledge, but also a great opportunity for the “other type” of social networking.