I often have small business owners tell me they are waiting to cash out of their business when the time is right. I then ask a few very simple questions? When do you think that might be? How much do you think your business is worth and how do you know its value?
My line of questioning goes on for a while until the business owner finally realizes that he or she has not really thought much about planning for their exit at all. Unfortunately, this is very often the case for the majority of small and medium sized business today.
Advanced planning for the sale of a business is more important today then years before. The demise of wealth management portfolio’s over the last 10 days and desires for baby boomers to retire places a heavy emphasis on exit planning strategies for every business owner and especially the family-owned business.
Here’s some planning advice to consider. If you want to sell your business start planning today to clone yourself by two-fold with someone that can fill your boots. If you don’t you may find you’re going to be stuck in the business even after it’s sold and simply collecting a paycheck. Or worse, you will get a very nice haircut discount of the selling price.
As part of the planning process you must be emotionally prepared to leave your business. Sounds simple, right? It’s not for the majority of owners. Consider this is your life day in and day out. Now think about it gone and nothing to build, think or worry about. It can be emotionally depressing for some.
Another important aspect of your business is keeping accurate financial records and getting either a review or audit each year or at least three consecutive years before you plan to sell. I know, it costs some money but it’s worth the price when you have to negotiate and the buyer can find nothing to pick away at because your books are clean as a whistle.
Finally, surround yourself with competent trusted advisors to help you navigate through this process. This is not something you ask your best buddy to help out with or go to for answers. Find professionals that have been there before and have the resources to call upon to get the job done for you.