Are you an entrepreneur who has built a successful, thriving business, but now feel the need to pursue a new passion in your life? Are you considering winding things down and taking it easy? If you think it’s time to entertain thoughts of succession planning, you may want to first stop and ask yourself a few questions:
- Have you spent time and money educating yourself on the transition process and discussed it with your loved ones?
- Are your personal, financial and business goals aligned (meaning are they defined, codependent and linked)?
- Have you created an advisory team which includes a combination of the following individuals?
- CPA, wealth or financial advisor
- Exit advisor
- Spouse, partner or significant other
- Have you created a contingency plan (essentially a will for your business) that contains specific instructions for your family and colleagues in the event of your sudden death or disability?
- Have you completed a strategic analysis, business valuation and personal, financial and business assessment(s) within the last year?
- Have you considered all your exit options and weighed the pros and cons of each in relation to your stated goals and objectives?
- Is your transition plan documented, and does it include the following elements?
- Goals and objectives
- Clearly defined tasks and accountabilities
- Definition of your transition team
- Definition of your transition process
- A designated project manager
- Timeline and budget
- Your role before and after transition
- Have you created a post-business plan for your life? Is it linked to your overall wealth management plan, which has been prepared by a professional financial advisor and, if applicable, an estate planning attorney, insurance specialist, tax specialist and charitable foundation specialist?
- Do you have a pre-transition value enhancement or preliminary due diligence project underway to de-risk the business, maximize its value, minimize taxes upon transition and improve its probability of success post-transition?
- Do you have a management program underway to ensure that your post-transition leadership is prepared for success after your exit?
These are but a few of the many questions you may want to ask yourself to clarify where you are in the transition process. The typical business transition can take up to three to five years from onset to close of sale or succession to a family member.
Let SST help clarify exactly where you are in this process, guide you through maximizing the value of your business and ultimately help you complete the transition process. Contact our experts today.
Thanks to SST senior tax manager Rachel Alexander for providing the content for this post.