Have You Planned Your Exit Strategy?
Have you planned for your business to carry on when you retire?
It’s hard to leave a business you’ve built over the years. It’s your baby. It’s how you’ve provided for your family, and it’s what gets you up in the morning.
So what have you done to prepare the business (and yourself) for retirement? Do you have someone in mind able to take over the business and run it as you did… successfully? And are you happy that that person will run the business well? That your customers will like him/her? That your techs will work as well for that person as they did for you? Or if a relative is taking over from you, the same things apply here as well as to a stranger or one of your employees.
You need to think of many diverse items in selling your shop and having a happy retirement. Let’s hope that you’ve documented your processes so staff can run your shop when you’re not there. This is really a test of how the shop runs without you currently.
Let’s take a look at some suggestions and requirements. I spoke with Norm Rose of Excel Sales Consulting, and here are some of the practical items he came up with.
Leadership: What is the new owner going to do with your shop when they take it over? It’s important that people’s legacies continue to thrive after they have stepped down. Do you care who’s buying your shop? Are they going to look after the business as you did? Are they going to keep it alive? Are they going to expand? Are they able to deal fairly with your staff?
Vision and Drive: You’ve done well with your business. If your family is coming into the business, will they have the same drive as you did? Where do they see the business going? Do they have a strong vision for moving this business into the future and profiting? Are they thinking of expansion? What will their role be in the company if there is more than one family member?
Due Diligence: This should come first. A financial analysis is most certainly needed. Don’t just rely on your accountant for facts and figures; get good advice from someone who is really credible about succession planning. You should know the value of your shop—what keeps your revenue down, what sends it up. You could even talk to your banker as they have all kinds of information and training for this type of thing.
Strong business plan: This is something you really need and should be done in writing. Your books need to be accurate and honest, and problems need to be sorted out and fixed.
Evaluation: Selling to your employees is a good step. They already know the business and are happy within it. You need to identify those leaders and approach them with your idea. Maybe they have had shares in it for years.
I realize many of you don’t want to pay for the investment to sell the business. You don’t want to pay an accountant, a lawyer, a financial advisor, but it’s worth the investment upfront and on all fronts as it could get complicated in the long run if you don’t and could ruin the deal. Make everything clear and above board—the relationships and value mean a lot.