The market for U.S. business sales is hotter than it’s been in years, according to business sales site BizBuySell. It’s a boom time for selling a business and will likely remain that way through 2016. If you’re a business owner who is thinking about selling or transferring your business to someone else within the next year, you need to start preparing. You want to make sure that you’re ready to sell when the time is right from a market perspective and from a business and personal standpoint as well.Read More
Richard was 64 years young and the CEO of a $10 million manufacturing company when we met him. He had been in business for over 30 years and he was confident that he could keep his customers happy and content even though his products were more expensive than those offered by his competition. As a result, he did not focus on keeping his raw material costs low or hire anyone to focus on marketing to attract new customers.
We find frequently that business owners who are looking to transfer out of their businesses focus a lot on the financial aspects of the process. However, as we’ve often discussed, there are a number of non-financial aspects of a business transition that need attention, as well. The non-financial issues are equally important and, if not addressed, can leave owners feeling irrelevant.
We first met John in the building where his father, a brilliant engineer, had started their manufacturing business over 40 years ago. It felt like we were walking into a museum. Everything in the office as well as on the manufacturing floor looked like a snapshot out of the 1970s. Nothing had been upgraded, painted or in any way modernized. The employees were all well into their 60s.
Have you developed a contingency plan for your business in case you die or become disabled? This is critically important. How many families and incomes would be affected if something happened to you tomorrow? How would your business function without you? Is there a written and realistic plan in place so that your management team and family could keep the business prospering?
All business owners will transfer the ownership of their businesses one day either before or after they pass away. Planning for the transition is critical to ensure:
Continuity of the business
Enough liquid wealth for the owner and his/her family
The minimization of taxes
Achievement of the owners goals
The preservation of business value
Family business owners often think the internal transfer process will be an easy one and the pieces will just fall into place but usually find out quickly this is not the case. Working with an advisor who is uniquely trained in business ownership transfers can help guide you through the process of developing and implementing a successful internal transition plan. An advisor can help you to:
Business owners are often too focused on day-to-day challenges to plan for the eventual transfer of their businesses. This lack of planning can jeopardize the future of their companies as well as the financial security of their families. Below are the top 5 consequences of not preparing a Business Ownership Transition Plan or BOTP as we call it.