A new year that begins a new decade is the perfect time for small business owners to take stock and evaluate their exit plans. Whether you intend to retire as soon as possible or in the very distant future, retirement is the inevitable reality for all business owners, whether you work until you drop or plan for a cushy, quiet future after your business.
No business can plan for everything or anticipate every potential contingency. A plan, however, is indispensable to your business’s success. So what are the components of a great succession plan?
One of the most common small business mistakes is working through the daily challenges of business ownership until a sale is imminent. By then, you have to do a lot of remedial work and an exit plan becomes an emergency. Without a plan, the business may close up. Your staff might lose their jobs. You might not have the retirement fund you hoped for. Your departure is inevitable; plan for it from the beginning.
Get a valuation so you have objective measures, then work to increase the value of your business to the greatest possible extent. Doing this early allows you to grapple with any unpleasant surprises and diligently work to build value. It also ensures your records are reliable and in order—a key ingredient in the recipe for a successful sale.
Know How Much Retirement Income You Need
How do you know if you’re ready to retire if you don’t know how much money you need and how close you are to that goal? A retirement budget is key to your plans. Work with a financial manager or wealth planner to establish a realistic retirement figure.
Empower Your Team to Succeed
It sounds counterintuitive, but the most successful business is one that can grow and thrive without you. Imagine what your company looks like without you overseeing daily operations. Do you have the right managers in place? Is your staff competent to run thins in your absence? Does your organizational chart establish clear responsibilities? Bridge gaps in expertise and skill now so that you’re not scrambling to manage these shortcomings later.
Get the Right Help
You might be an expert at running your company, but the odds are good that you’ve never sold a business before. You need to bring in independent experts who are not blinded by their investment in your company. Consider working with an exit planner, wealth manager, and an M&A advisor to oversee the process from planning to completion.