Every Business, from the largest multinational to the smallest convenience store will eventually undergo a Business Transition.
Whether it’s passing the business on to family or selling to an investor there are a few key points to keep in mind.
(Winding up the business is another option, which we will discuss later)
Separate yourself from the Business
By this stage of the game you’ve poured a lot of your blood, sweat and tears into your business. You know the idiosyncrasies of the suppliers, the exact capabilities of the staff and where the good coffee is kept. This is good, but if you are the only one who with this understanding, you don’t have a business to sell. It’s just you.
You need to separate yourself from the business so that if you weren’t there, due to illness or an extended holiday in the Bahamas, your business would keep running along.
The simplest way to achieve this is documentation, and lots of it. By documenting your processes and procedures, even the most inane, you empower your employees and business to run independently of you, and remove one of the larger stresses of a Business Transition.
Of course you may find some areas that you can do better along the way. It’s a win-win.
Understand the Why
When it comes time to transition out of your business, make sure that you sit down with your external advisor/s and work out Why you are transitioning out of your business and what your goals are.
Are you looking to sell the business for the resources to retire comfortably?
Do you want your family to take over your business?
More importantly Why/Why Not?
By talking it out with an external advisor, not only will they be able to help you find the best vehicle and solution for your particular needs, but they can keep you on track and accountable when things get difficult.
When it comes time to arrange the actual transition it would be wise to bring in an external advisor (or a team depending on your business) to help get the optimum value out of your company, and handle the sometimes labyrinthine tax, structural and legal considerations.
Whether you are laying the ground work, investigating your options or starting the Business Transition, talking to your accountant is a good place to start.