Headlines from major news outlets across the country are telling a story about the “Silver Tsunami”: As baby boomers close in on retirement, more businesses will be coming on the market. Currently, boomer business owners are in various stages in relation to transitioning their business, with some ready to do it yesterday and others who have not begun considering the possibility. What stage are you in?
As a business owner it’s important to take some time and consider your company’s stage, as well as your own. When reviewing your short and long-term goals, consider the following questions:
- Does your company have a management team that operates effectively?
- Can the company continue to operate while you take a vacation for a week? Two weeks? A month or more?
- Is most of your net worth held in the company? Do you know the value of your company?
- How might taking on long-term debt benefit the company and you?
- Is the business ready for a new owner? Who might the new owner be?
- How ready are you to transition out? What is your optimal timing for retirement?
- If you are ready to exit your company, how might taxes affect the amount of money you receive from a sale?
- Is there a way to structure a sale that meets your goals and the goals of the company?
These are just a few of the questions business owners need to answer to determine what stage they and their company are in. The answers to these questions are important to you as an owner as they are to potential buyers.
Regardless of how close you are to exiting the business, the best advice I can offer is to develop a plan, and then identify both individuals within the company and outside professionals to help you execute that plan. This will be invaluable for you, your business, and your employees when you are ready for the next stage.
So how do you begin planning? Well, that depends on your stage. Are you ready to exit, or do you want to continue growing your company? In either scenario, there are some overlapping elements that you can begin to work on as you determine what stage you are in and where you want to be.
One of the most important elements is to ensure you have a management team that can run the company effectively in your absence. So take that much needed two-week vacation — and given how cold it can be in my home state of Minnesota, my recommendation is somewhere warm! This time away will give management the opportunity to rise to the challenge. And it will give you time to think about what you want your next stage to be.
In a later column, I will cover more of the questions above and identify some different ideas to bring your plan to fruition. So in the interim, take time to ponder what that next stage will look like.
Original content written for the American City Business Journals (2016). View source webpage here.