There is a lot to consider to make sure the business you spent your resources building can survive with new management.
After all the years of building and operating a successful business, some owners will likely be ready to retire. However, many business owners don't think about what will happen to their companies after they walk away.
Forbes’ recent article, "Eight Factors To Consider Before Retiring From Your Business," provides us with some advice on what business owners must do to retire successfully.
Let’s take a look at six of them:
- Plan ahead: As in anything, a good plan is to prepare, in this case, years in advance. Pinpoint the major areas that could hamper the sale.
- Identify a successor: Have a detailed succession plan in place. Identifying your successor(s) early in the process will allow you time to gradually place them in their new responsibilities and give them the benefit of your wisdom and experience.
- Make the business work for you: If your business would break down the second you step away, you’re working for your business rather than your business working for you. The time to think about your exit strategy is when you start your business, not when you’re ready to exit.
- Prepare an exit plan: Because most owners depend on their businesses for income, a lack of planning could put their main source of income at risk. It’s critical for a business owner to meet with her legal and financial team to decide on the best exit strategy. Learn your options and make an informed—rather than an emotional—decision.
- Keep working after the exit: Stay on for a few years through the exit to let your buyer have some time to transition and structure better buyout terms for you, as you help them grow through the transition.
- Create solid systems: These systems and processes are needed to provide a smooth transition from one leader to the next. These are things like standard operating procedures (SOPs), key performance indicators (KPIs) for the overall company performance, decision and authority descriptions that say who can make decisions and has authority over specific areas, set responsibilities and a clearly-defined organizational chart. These are crucial in the transition process.
Reference: Forbes (August 27, 2018) "Eight Factors To Consider Before Retiring From Your Business"
Need help with your own succession planning? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.