I’ve heard many business owners say, “I don’t know what I’d do if I didn’t have my business to go to every day.” One thing that many business owners have in common is that they find more satisfaction in staying active in their companies than any alternative they can consider. This happens no matter what their age, their accomplishments, or their financial success. Business owners are unlike employees who may retire because their friends are retiring or because they become eligible for Social Security. Business owners have an emotional attachment to their work and their company. However, I think oftentimes business owners’ satisfaction in staying active in their companies is closely aligned with a fear that they will find little significance in life without identifying with their profession.  A significant part of the succession planning process is looking to the future and deciding what is next for the business owner. The smart business owner is developing his developing his succession plan 3 to 5 years before his exit from the business. A well thought-out succession plan allows the owner to plan their life after business.

Over the years, I’ve learned that it is a big mistake to push a business owner to make a decision to leave a business before he or she is ready. Anyone who pushes you to exit your business before you choose to is clearly out of line. After all shouldn’t you also be the one who gets to say when you should leave? I think so. However, as a leader and business owner, you have a responsibility to prepare the business for the inevitable. There’s no escaping the reality that someday you will leave the business voluntarily by retiring and turning it over to someone else (possibly staying on with the new owner for a period of time), or by starting a new business, or involuntarily due to an illness or a life-and-death crisis. The result is the same: we all have to leave someday; it’s unavoidable. The outcome is generally always better when it is your decision and timing is based on a well thought-out succession plan. Make time to work on your succession plan it will be the best invest you will make.

By planning in advance for something that you know will be needed in the business succession planning process you will make the due diligence period go faster and make everyone’s life easier during the stressful time of the business transfer. Add these 5 things to your exit planning list:

1.       Diversify your customer base and products

2.       Create a list of growth opportunities that have or have not been pursued

3.       List strengths and weaknesses

4.       Consider outsourcing some services

5.       Create database of past and current customers

It is often said: “Timing is everything”.  Timing is also the most likely reason that a business sale may fail.  As a potential sale drags on, the business owner is left in an uncomfortable state.  Why? Mostly because of lack of planning; business owners must prepare themselves – here are five more things to you exit planning list:

1.       Sell excess inventory/write-off obsolete inventory

2.       Collect aging accounts receivable and make them current

3.       Remove unnecessary family expenses

4.       Understand the “net” after the sale proceeds

5.       Create a control plan for quality control

Planning for business succession means it’s time to get every thing in order, both from a family and business perspective. Here are a few things to add to your exit planning list:

1.       Formalize contracts with customers

2.       Formalize contracts with suppliers

3.       Clean up legal issues

4.       Understand the “true” value of the assets

5.       Repair / maintain equipment