More and more small business owners are selling their companies, with sales hitting a four-year high earlier last year in the United States, and Canada predicting its largest small business turnover ever in the next five years. Small business owners need to start planning years before they might, potentially, be ready to sell or hand off their businesses.
“Many of our CEOs are baby boomers approaching retirement age,” says Kathleen Richardson-Mauro, co-author with Jane M. Johnson of a practical new guide, Cashing Out of Your Business, (www.richardsonmauroandjohnson.com).
“We’re about to see a tsunami of ownership transitions, and too many of these small business owners are not taking steps early enough to plan for it,” adds Johnson.
Richardson-Mauro and Johnson suggest these steps to begin preparing mentally for their non-CEO future:
• Start now. You never know when you might receive an unsolicited purchase offer or what life events might rock your world. Most owners do not start thinking about transitioning out until some event gives them a jolt: a significant birthday; children graduating from college or starting their own families; illness or injury. With planning, you can ensure you still have a social life, a sense of accomplishment, challenges, and the other intangibles that make us satisfied and gratified.
• Identify what you want to get from your ownership transition. You’ll have both financial and non-financial goals and objectives. Financial may include receiving enough money to live on for the rest of your life and creating a foundation to further a cause important to you. Non-financial may include regaining balance in your life and following a passion you gave up when you started your business.
• Identify your fears, concerns and other barriers that prevent you from planning. Many owners fear what will come next and worry about losing their life’s purpose. Most wonder if they will have enough money to live the lifestyles they desire, and they’re concerned about their employees’ futures. Take proactive action to address these concerns by having a family meeting; discussing the future with your spouse; and identifying your actual financial needs.
After all of your years of work and sacrifice, you deserve a happy life after business. It’s completely doable with planning. HBM
Richardson-Mauro, a Certified Financial Planner, and Johnson, a Certified Public Accountant, specialize in helping business owners successfully transition out of companies and achieve their goals. Their website, Business Transition Academy (http://www.businesstransitionacademy.com), helps owners plan their exits on their own.