Most businesses aren’t ready for sale. Most businesses aren’t in a proper place for succession. Why not … after all succession planning is just simple good risk management?
Because the honest truth is that most of the time we don’t want to think about it.
The reality is that planning for the sale or succession of your business is one of the most important things you can, and should consider.
Whenever a business is sold, it will generally go through a due diligence process. The more you want to sell it for, the more extensive will be this process. This translates to people plowing through your history looking into your dirty laundry. The cleaner and tidier it is the more they will pay. The dirtier and grubbier….. well you get the message.
There are two ways a business ends up for sale …… planned and unplanned. But your business should always be ready for sale…..
There are hundreds of reasons why you should plan for the sale of the business or succession planning issues. Not the least of which is that it will add significant value to your business. If your business is ready for sale or succession, then it is in shape for the time you want to (or need to) sell or transition it.
The reasons we avoid succession planning or having our business ready for sale are exactly the reasons why we should. To name a few:
- We think we are invincible, the thought that something may happen to us is something we don’t like to, or want to, think about. But what if something does happen……..
- The business is your largest asset
- The business is also your largest income producer. Therefore you rely on it, your family rely on it, and the people who work for you rely on it.
- You need to protect the business for the benefit not only of yourself but for the safety and security of your family. Your family won’t want or need the stress of working out how to run the business and what to do, while at the same time managing all the other consequences if something happens to you.
- You could decide, or need, to sell at any point in time – but it takes time to have the financials in a format to maximise the sale value.
It’s all about having choices. If you have it ready for sale or succession and have a plan or strategy, then you can choose what you really want to do, at a time when you want to do it.
I want you to think for a moment what would happen if the doors to your business could not open tomorrow.
Who does that effect? (Family, employees, friends and customers)
How many things will it affect? (Dollars, emotions, now and in the future)
Now imagine that you could protect all those people from that stress, worry and financial difficulty.
Yes that’s right you can; or you can minimise any impact by planning and putting in place strategies.
I have seen good businesses go bad because of one single event. Good businesses, but with no plan, no strategy and no shared knowledge.
I have been through this personally, been the one who has had to work out what to do in my own business. I remember clearly what my family was going through. The last thing we needed was to work out what to do about the business – but everything relied upon it so we had to do something – at a time when it was really the furthest thing from our mind.
I was battle scarred and it has made me extremely passionate about the importance of dealing it up front and early, and I implore you too, to do this.
For yourself, for your family and for everyone around you DO this, plan for your succession or sale. Discuss your strategies and work through the succession plan. Think about it this way, if you do nothing else in your business, you take out some form of insurance. From that viewpoint this is one of the most worthwhile risk management insurance policies you can have for your business and your family. And the upside is – there’s no better way to ensure you get maximum value for your business when it comes to sale time – whether that sale is planned, or forced on you by circumstances.
And you know what else… when you’ve done it gives you the freedom to make choices, the world open ups with new possibilities for the business and yourself, because you are free to choose knowing that the business can continue no matter what happens.