The Hard Work of Business Transition Planning
Owning a business takes a tremendous amount of effort and resources. You would certainly want something that you’ve given so much to nurture to be on firm ground for the short and long term. Unfortunately, most entrepreneurs spend most of their time and energy on the day-to-day operations of their business. It is important to take some time out to focus on working on the business versus working in the business.
Making sure your business is financially sound is obvious. However, it is also important to have a plan in place and ready to be executed in case you or one of your key partners doesn’t show up tomorrow or is unable to continue contributing to the business. Taking the time to work on this part of the business not only protects your
family, but also your employees and customers. Having a well thought out buy/sell agreement with mechanisms in place to fulfill the agreement is a major part of the plan.
Protect your legacy
Over the long term, there will come a day when you hand over the steering wheel and step back or away. It is important for this to be as smooth a process as possible to protect the legacy you’ve worked so hard to build. Identifying and preparing the next generation of leaders will help tremendously. Making yourself less critical to the business over time will make it much easier for the new leadership to keep the well-oiled machine running smoothly. Key is having a solid operating agreement that makes it clear who and how the business ownership and control will transition and how the valuation of the business will be determined. The “who” in this case could be other shareholders or existing key team members. Methods for a transition could include an outright sale to a third party, a buyout by existing employee/owners, or an employee stock ownership plan as examples.
Do you have the right plan in place?
Working on a plan can be difficult but it puts your business in position to weather any storm. The right plan protects your legacy and gives all involved comfort in knowing that there is a future vision in place. Let us help you start the process and bring together the team of professionals that can aid in formulating an effective plan.
