One Question Founders Must Ask Themselves Before Transitioning Their Business
By Kyle Danner - April 18, 2019
It's time to retire. You've been counting down the years, dreaming of sleeping in, and planning all the family vacations you never had the chance to take before.
But you're not ready to transition out of the business just yet.
Even if you believe the Next Generation is ready to take over the business, even if you have an offer on the table you can't refuse, something is holding you back. If you can't answer this question now, you'll find yourself digging in your heels — and preventing the business from reaching new heights.
What You Should Ask Yourself Before Transitioning The Business Over To The Next Generation
“So what do you do?”
It’s a common question. Usually, the first one we ask after meeting someone.
For most of us, our work — including our occupation, title and even the company we work for — defines who we are. And most people shape their perceptions of us based on our answer.
While it’s a simple question, and often asked as a conversation starter, "What do you do?" can be laden with judgment. Just ask stay-at-home mom and dads or anyone in a nontraditional work setting.
It’s one of the first questions I pose to family business founders wanting to transition their business. Tell me how you’ll answer the question “So what do you do?” after you transition your business.
This often throws founders for a loop. But it could be the secret to preparing your business for what's next.
Founders focus so much on the transaction that they don’t fully consider life after the sale. That’s critical to remember. A report by The Exit Planning Institute found that only 25% of business owners are satisfied after the sale of their business.
That’s alarming since building a business is someone’s most significant accomplishment after raising a family.
Without a clear answer, founders will find themselves delaying action on transition planning. That delay can be costly. Transitioning a business is a complex process that requires ample time for deliberate thought and planning.
How To Determine Your Next Steps After The Business
If you are a founder thinking of transitioning your business, don’t delay the discussion with yourself, your spouse and your family. Invest time to think about how you will answer the question, “So what do you do?”
And then, seek exit planning services.
Many business owners don't see their business from the eyes of a potential owner. They see it from their own eyes: as the company they've built from the ground up. The danger in this is you may end up neglecting the strategic management and processes side of your business. This reduces the value of your business to a buyer.
When you use exit planning services at the beginning of your investment, you can:
- Prepare for trade and financial sales
- Make effective use of the buyback option
- Better market your business for sales
- Get additional support and guidance
It may seem like an optional step. But, without adequate exit planning, you can lose significant value when passing your business onto another company or the next generation.
Let's make sure your business and the family have the foundation they need to grow for years to come. Schedule a no-obligation conversation today, and I'll work with you to help you successfully transfer your business over to a family member or another company.