Many small business owners have the goal of handing the business over to a family member when they reach a certain age. That’s fine, but will that person be able to run the business then? Does he or she need particular qualifications? Will he or she need special training before they can take over? All this has to be thought through years in advance. It’s time for the business owner to be making a plan for succession management.
Other considerations will be based on your own importance to the business. If it literally can’t get along without you because of your expertise or some other factor, what happens if you’re forced to exit by illness or accident? Your plans for the value of the business when you leave it could be totally negated unless you’ve planned for such a contingency.
If your intention is to sell the company at a certain point in time your strategy will be to enhance the value of the business between now and that date by increasing the worth of its assets. How you do that depends on many factors, but for some firms it’s going to require a sustained drive for a larger customer base and/or an expanded range of products. For others it can mean an emphasis on research and development to develop and patent new products or processes.
To get the best possible price when selling the business it’s essential to maintain accurate and verifiable records from day one. Most buyers looking to purchase a business generally want to see at least three years of financial information.
If you haven’t considered these questions, you likely don’t have a plan for succession in your business. This lack of planning for succession is putting you, your company and family at risk. Find time to at least consider the full potential of that risk.
