Succession planning is a hot topic for businesses these days. Even though it’s on the minds of many business owners, it can be hard to start the planning process.
Which exit strategy is the best for you and your business? Will you pass the business on to a family member? Sell to your employees or a third-party? What’s your business worth? All of these are key questions you’ll need to answer, but it’s important to remember that succession planning is a marathon, not a sprint.
In fact, a successful planning process can take up to five years – sometimes more – because it involves a lot of moving parts. The good news? It’s never too early to start. One of the best ways to start the process is to take the time to determine your end goal. What do you really want? Your path to exit planning will be unique to you and your business, but there are some common questions all business owners should consider.
As you begin to think about what your exit strategy will look like, start by thinking about these questions and be honest in your answers. When you meet with your team of advisors, knowing how you feel about each of these questions will help you and your team develop the best exit strategy for you and your business.
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- When do you want to stop working?
- How much money do you want and/or need to retire?
- Do you want a lump sum of cash or a series of payments?
- Who do you want to control the business after your exit?
- Is the business ready to operate without you? If not, what needs to be done to get it to that point?
- What is the current value range of your business?
- What kind of legacy do you want to leave behind?
- Are you personally ready to leave the business, assuming it’s ready to operate without you, and you could find a suitable buyer at a suitable price?
- What’s great about having the exit you desire?
- What’s hard about exiting your company?
These are just a few of the questions you’ll encounter in the exit planning process, but they serve as a foundation and are a great way to break the ice on the succession planning conversation. Whether practical or emotional, starting to think about the outcomes you desire is the key to launching a successful transition.
Have questions about beginning your succession planning process? Let’s talk!