Most entrepreneurs fail to plan how and know when is best to pass their business on to others. The result is that they often face being taken advantage of by potential successors and buyers, including, and sometimes most especially, by their own family members. The justifiable financial reward business owners seek for their long, hard life’s work can become disrespected and discounted. Family relationships can become torn apart, and unhappiness frequently manifests.
I’ve dealt with these issues all too often while advising family business owners. It’s painful, and putting it bluntly, it’s stupid and unnecessary! As a result, I’m on a mission to help educate and guide baby boomer family business owners how to build the value of their business, sell their business for the most money possible, and live happily ever after.
First of all, I can’t emphasize enough how important it is to start early in the business transitioning process to implement your succession and exit planning strategies. Accordingly, make all your hiring decisions along the way with this in mind. You want to avoid having to undo disruptive hiring mistakes. The people you select must be qualified to operate the business without your necessarily being present. I had to make some difficult management changes in my business before I had the right team of professionals, and it was costly both emotionally and financially.
Another reason for starting the value building process very early is because you need to be somewhat feathering your nest in advance for ensuring your personal financial well-being when you decide to leave the business. It can be a mistake always leaving any and all money beyond your basic living expenses in the business for reinvestment. From a business standpoint this might make the most good sense. However, then when you want to extract enough business equity to fund your personal finances beyond the business, you could encounter company buyer resistance to the sizable amount you require. This can cause unwarranted stress and strain, and too often business owners become aware that it’s often family members as buyers who feel outrageously entitled without any concern about causing detriment to the owner’s financial security.
To do what I’m recommending for your financial benefit, you need to determine along the way a healthy financial allocation between what amount you should be leaving in the business and how much funding in advance you’ll require for achieving your future financial security. In order to know what you would require personally, you must prepare a comprehensive personal financial and estate plan in conjunction with a strategic, value building business plan. Here again, starting early is in your best interest as well as for all the beneficial interests of other potential stakeholders involved when you depart, no matter what the cause or reason for this event happening, either voluntary or involuntary.
Please CLICK HERE to find out more and contact me directly for answers to questions you might have about your specific situation or to set up a confidential, Value Builder assessment of your particular business status. Learn from my experiences and expertise before you make possibly costly mistakes harmful to you, your business, and your family.