“While 54 percent of business owners plan to leave their business in the next 10 years, 72 percent [of those] have taken no exit planning action,” according to a recent study. For most business owners, their business is by far their largest asset, and not properly planning for its transfer can put them, and their employees and family members, at risk. Being prepared is the key to success. It starts with owner education, allowing enough time to plan, seeking the best advice, and creating a Business Ownership Transition Plan (BOTP). A BOTP is a comprehensive written document that outlines how and when the ownership of a business will be transferred to others, either internally or externally, in order to achieve the owner’s long-term financial and personal goals.
There are many factors that contribute to a successful business transition. Here are seven key areas that owners need to understand and address that can help lead to a positive transition experience. This takes time, but it is worth the effort. When it comes to planning for the future of your business, your family and your retirement, there are no shortcuts to success.Read More
“Family businesses and their leaders are the ultimate entrepreneurs. They must continually innovate to grow and pass on a thriving business from one generation to the next. Our survey demonstrates how this entrepreneurial thinking across generations results in business success and strong family ties.” ~Carrie Hall, EY Americas Family Business Leader
Topics: family business planning, family business, business owner transition, business ownership, baby boomers, Family Business Exit, Family Business Transfer, business ownership transition, successsion
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.
Bob owned and operated a profitable printing business for over 30 years. His son Jason was active in the business as the VP of sales and Bob had been grooming him to take over the company since he came on board about 3 years ago. Unfortunately Bob never really spoke to Jason about officially taking over and when Bob told him he intended to retire the following year due to health issues, Jason surprised him with a bombshell; he had no interest in taking over the company. He had only worked there to help his Dad out. In fact, he really didn’t enjoy the industry much and would be looking for a job elsewhere once his Dad retired.
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.
Control as Deception
If you are considering selling your business, you need to consider your financial as well as non-financial goals including:
Success is the root of the word succession. But often the succession of a business is far from successful. I believe this is partly due to a narrow understanding of the word, which follows the dictionary’s definition. Here is how the Merriam Webster Dictionary defines succession:
As a business owner who is thinking about life following the sale of a business, it’s essential to plan for how you are going to fund the next phase of your life. You want to ensure that the sale of your business will provide enough for you to achieve your personal and financial goals. We often find that business owners have not calculated their Wealth Gap or how much money they will need from the sale their businesses. It’s the difference between what you currently have saved outside the business and how much you need to save outside the business to provide your desired income.