No matter what size your business is, planning for the succession of the ownership and leadership of your business is the key component to its long-term success.

3 Options

Your succession planning might consist of one or more of three options:

• Transitioning the ownership to someone in your family or organization
• Selling the business
• Closing the business

Option 1: Leadership Transition

Transitioning your business to someone in your family or organization involves:

• Leadership – Is someone within your organization capable and ready to take over your business? And if so, when?
• Valuation – What is the value of the business, especially when a partial interest is being sold?
• Payments – How will the new leadership pay for your interest?
• Workout – What role will you play in the transition and for how long?
• Tracking and Benchmarks – keeping the transition on task and on time

Option 2: Sale of Business

Selling your business requires three to five years of intensive planning before the property is ready for sale. Some of these issues include:

• Collecting accounts receivables
• Selling excess inventory and equipment
• Evaluating the current prices and terms
• Evaluating building and equipment leases
• Evaluating, training and development of key employees
• Evaluating the pay structure of the key employees
• Evaluating the pay structure of the owner(s)
• Improving the cash flow of the business

Option 3: Close of Business

Many businesses pursue the first two options simultaneously, reserving the option to close the business as a last resort.

It Takes a Team

No one professional has all the skills you will need in the succession process. Here are a few of the members of the team you may need:

• Certified Public Accountant
• Business succession attorney
• Employment law attorney
• Business appraiser
• Real estate appraiser
• Business succession consultant
• Business coach
• Real estate agent