Taking an integrative approach to business transition planning is something that many owners fail to consider when they think about retiring or selling their organization. During this period of transition, it is vitally important that your plans for your business and for your personal life are aligned. You need to develop a coherent strategy, in order to have a clear idea of your path forward.
In this blog, I will explain some of the ways that an integrative approach to business transition planning can help. I hope that you will find them insightful!
1. Understand Your Personal Goals
The first stage of transition planning is taking some time to figure out your personal goals. You will never reach where you want to be if you have no idea where that is!
This stage demands that you ask yourself some hard questions to determine your personal objectives. Why are you in business? When do you want to move on? What do you need financially from the sale or transition of your business to take these steps? Who would you like to take over the business?
2. Ensure Your Personal Goals Will Be Met
These early stages of personal transition planning give you a chance to examine your life from a holistic perspective. Oftentimes, you do not know who you are outside of your business. This can create stress and anxiety when you think about leaving. In turn, your anxiety can hold up the entire transition process and even derail deals that are close to completion.
Consider the following things: What do you want your life to look like, once you are no longer in the business? Would you like to start living that way now? Many people fail to ask these questions, but this is one of the most important steps in the process.
3. Ensure Your Financial Goals Will Be Met
You have worked hard in your business. You want your hard work to be reflected in your finances, after you leave. Will your transition provide the money you need to fund the next stage of your life? What can you do to ensure this happens?
4. Determine the Best Transition Option
Choosing the best transition option is all about figuring out what fits your situation. Do you want your family to take over the business? Do you want to sell it to a key employee? Is there a strategic buyer that is dying to get their hands on your business? Select the option that is the best match for your needs and objectives.
5. Maximize Business Value
Will your business provide the money you need to meet your financial goals? If it won’t, then you may need to find ways to increase the value of your business before the transition. Here are some ideas to start maximizing business value:
- Finances: What is your financial history like in the business? How are your financial records and what can be done to improve them?
- Strategic planning: Tap into the power of the people within your organization. Create a clear path for improving your business and share this with your employees. This can help create an organization where people understand how their efforts impact the overall goals of the business.
- Management: Mentor potential internal successors and look for other ways to increase internal management strength. This will make the business easier to run in the short-term and reduce its reliance on key individuals, which will increase its value and transferability.
- Smart policies: Creating policies and procedures that help the business run more self-sufficiently can attract potential buyers. Wouldn’t you pay more for a turnkey operation, if you were looking to take over?
- Assets: Think of ways to improve factors like physical location, state of equipment, customer diversification or product strength. All of these assets will make your business more attractive to potential investors.