It's time to start thinking about how your business would fare without its key employee: you.
If you're like many business owners, you are the very foundation of your company's success--it simply couldn't work without you. And while this may be a well-deserved point of pride, it's not a great thing if you're looking to sell your company or are suddenly forced to step away.
You'd be forgiven to think that day will never come, but it's unwise not to plan for it. Without careful planning, your business could be left poorly managed under the control of family members or staff who are unable or unwilling to run it, or crippled by estate taxes. Here are a few ways you can help make the transition as smooth and painless as possible.
Groom Your Managers
Can you delegate your authority to a cadre of capable managers? If the answer is no, you'll need to groom not just your own successor, but also a team of executives capable of running the business on their own. Start by establishing clear guidelines for hiring and advancement, as well as mentoring programs to develop the next generation of leaders.
Make Your Staff Your Allies
If your best exit scenario is selling to an outside bidder, your staff is likely your biggest resource--all the more reason to make sure they're capable of performing well without your supervision, and that they feel fairly compensated. If a sale is in your future, keep your staff informed. The last thing a potential buyer wants to see is good talent jumping ship because of uncertainty. If you plan to sell to an insider or pass your business onto the next generation, the sooner you choose your successor, the better. But keep other scenarios in mind, just in case.
Plan Your Exit Strategy
According to Julie Gordon White, a certified business broker, member of the Women Presidents' Organization and author of Exit! 12 Steps to Sell Your Business for the Price You Deserve (exitjourney.com), a successful exit takes five years of planning: six months to complete an analysis of your strengths, weaknesses, opportunities and threats; 18 months to implement the findings; and three years to file profitable business tax returns.
Forge strong relationships with your financial advisor, attorney and accountant to determine the best plan of action to accomplish your preferred outcome. Seek out individuals or firms with specific expertise in business succession planning for privately held and family-owned companies.
Continue running a tight ship; pare back expenses that might seem unnecessary to an outsider, and strive to hit your growth and profitability goals. Think of these strategies as revving up for the home stretch while making your business even more attractive to potential buyers.
It's never too early to plan your exit strategy, and the sooner you start, the greater your company's chance of success without you.
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