Your
Objectives
Any type of
plan is only successful if it achieves your desired objectives. When do you
want to leave your company? To whom do you want to transfer or sell your
company? How much cash do you want or need to secure your post-business life?
Do you want certain employees to be benefited by the transfer? Do you want to
pass wealth down to your children or to other family members?
Your
Financial Resources
If you sold
your company tomorrow for its present market value, would the cash you derived
from the sale be sufficient to provide you with a financially secure
post-business lifestyle? Is there a gap between the current value of the
business and what you need for your financial security?
Building and
Protecting Business Value
Do you know
which Value Drivers exist in your business and which, if any, are missing? The
term "Value Drivers" encompasses those things that build value in a
company such as a strong and motivated management team. It also encompasses
those things that protect the company's value such as separation of duties and
effective financial controls.
Business
owners generally understand the importance of building value. However, it is
every bit as important to protect the business value that has been achieved.
Transferring
or Selling Your Business
Have you
considered whether your preference is to sell your company to your children,
one or more employees, to a competitor or to a third party? Many business
owners want to sell their businesses to their children or key employees and
think they can't do so because those buyers generally don't have the money
required for the purchase. Many owners think they would end up carrying a large
note and would be risking their financial security in retirement.
There are
many options available to those business owners that take the time to identify
their objectives and plan their exit accordingly. It is the business owners
that attempt to sell their companies without prior planning that have severely
limited options.
Other
Considerations
What would
happen to your business if you unexpectedly were unable to show up for work for
six months or longer? Would the business continue operating successfully
without you? What would happen if you transferred leadership of the company
without transferring ownership. Would the company's revenue and earnings be
detrimetally affected?
Appropriate
planning allows business owners to leave the company if and when they want,
with the cash they want or need, and provides a road-map to be followed if
something unexpectedly happened to the business owner.
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