An estimated 600,000 new businesses open their doors each year across the United States according to a recent report from the Small Business Administration.
8 Tips to Ensure Your Business Transition Runs Smoothly
All the entrepreneurs behind those businesses work hard to bring their dreams to fruition. While most have goals of growing, expanding and establishing their place in their market niches, many have other underlying intentions as well. In such cases, their businesses are ultimately a means to an end with the end being their retirement years. In fact, nearly 75 percent of business owners intend to sell their companies once they reach retirement age.
Paving the Way for Success
Quite a few business owners who fall into this category believe selling their companies when they get ready to retire will be a fairly straightforward process. Unfortunately, they’re mistaken. This misconception leads to quite a few problems when the time comes to sell. That being said, certain measures can help avoid the common hassles and hurdles that arise when selling a business.
1) Reach Out for Help
One of the simplest and most powerful tips for ensuring a business transition goes smoothly and successfully is reaching out for help from Business Transition Advisors and other professionals. This measure, alone, will help keep you on track and guarantee that your business is ready to change hands when the time comes.
2) Have a Plan in Place
Plans are immensely helpful in every aspect of the business world. You must have a plan to create your business and develop new products and services. Plans are essential for dealing with growth, hiring new employees, and creating new marketing and advertising campaigns. Preparing to sell is no different.
Join Our Small Business Community
Get the latest news, resources and tips to help you and your small business succeed.
3) Know Your Business’s Worth
It’s easy for business owners to let their emotional attachments cloud their judgment when it comes to how much their businesses are worth. At the same time, it’s not very difficult to overlook some of the elements that can actually drive up the value of your business. Knowing exactly how much your business is worth is a vital component of selling it successfully and getting the maximum value from the deal. Because of that, a professional business valuation is critical.
4) Be Prepared for the Unexpected
Things don’t always work out as planned. As dark as it may seem, there are dangers all around us. You could suffer debilitating injuries in an accident or develop a fatal illness long before the time to sell your business rolls around. This could also happen to any business partners you may have. Everyone involved should come together and decide how to proceed if something like this should happen to protect your partners’ best interests as well as those of your surviving family members.
5) Transition Gradually
One of the most effective ways to ensure a change of ownership goes smoothly is to transition gradually. Don’t disappear as soon as the transaction takes place. You can hand over ownership to the buyer but stay for a few months or years to help everyone adjust to the transition.
6) Keep Clients in the Loop
Numerous companies have lost a significant amount of business once word spreads about a change of ownership. Let your clients know that even though you won’t be in charge any longer, they can still count on the same quality and service they’ve become accustomed to. Keep them apprised of various phases of the transition process and how everything may or may not change moving forward.
7) Get Your Employees Ready
Keeping employees in the loop is also essential. A change of ownership can be particularly frightening for them. They’ll want to know whether they’ll still have their jobs when the new owner takes over or the new owner will fire them and bring in their own teams. They’ll need to understand how or if processes will change once you leave. Give them the certainty they need by keeping them informed.
8) Prepare the New Owners
Another essential step in the transition process is making sure the new owners know how to run the business. Don’t just hand over your company and hope it’ll stay afloat under new ownership. Let the new owner in on all the details, processes, and secrets you’ve learned over the years to help foster the transition and improve the company’s chances of success in the future.
Promoting Triumph During Transition
Like all entrepreneurs, you’ve invested a great deal of time and effort in your company. Still, the time will come when you’re ready to step down and hand over the reins to a new owner. All these measures will go a long way toward ensuring that the transition goes smoothly. Keep in mind that it’s important to set the wheels into motion long before the transition actually takes place to help foster success.
Some other articles you might find of interest:
Make your business rock with these business plan writing skills:
Would you like to know how investors value a startup?