The following is an excerpt from Ice Miller's Business Transition Strategies to Preserve Wealth Guide, which provides insights on a variety of topics to help ensure a smooth business transition.
Why do you need a business transition plan? Let me give you six good reasons.
Consider this: according to the U.S. Small Business Administration, 80 percent of the businesses that go to market each year don't sell. That seems impossible until you consider that more than half of all business owners have done no exit planning at all. Two-thirds of business owners either don't know, or aren't sure if they know, all of their options for exiting the business. Seventy-five percent of them say they don't know what their business is worth. Given the dismal lack of planning, it's no wonder that most businesses don't sell.
The exit planning process doesn't have to be overwhelming. Here's how to start. First, get an independent assessment of the value of your business. One principal reason that businesses don't sell is that owners tend to overestimate the market value of their businesses. It's best to get a realistic, independent estimate of what someone else would pay to acquire your business. Second, determine your family's financial goals, and work with a financial planner to better understand what you will need from the business to achieve those goals. Third, begin to develop a plan for how you will spend your time, how you will exercise your brain, how you will stay active and how you will continue to be relevant after you exit the business. Don't underestimate the importance of a post-exit plan.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.