Few decisions are as individual and personal for the owner of a family business than the decision to move on. Sometimes moving on simply means moving on to another business, hence the expression “serial entrepreneur.” Sometimes it means transitioning to a time when you can finally relax and do the many tasks, which might include volunteering or travel that you have been putting off with the pressures of day to day administration.
Health might factor into your decision or passion.
One thing you can try to avoid is closing your doors leaving nothing behind. As with all planning, you often can choose in advance. Business succession difficulties run the gamut from personality differences, difficulty in convincing clients to stay with the new owner long enough to make the sale attractive, and solvency if there is a long term buy-sell agreement. Even where everything else works, and even when family is involved, the emotional effect of loosening control over a business that might have taken a lifetime or even generations to build can be traumatic.
Here are some issues to take into account.
In “How Do Strategic CEO’s (and Owners) Work Themselves Out of a Job?” www.thiswayoutgroup.com, Kerri Salls made the point this way:
“When you want to sell your business, you want to command the highest possible value. For your business to merit the highest possible valuation, you must prove to the business appraiser and your prospective buyer that the value is in your business, not in you the owner…”
The skills involved in divesting yourself of your business are very different from the skills involved in startup. During startup, the business owner does anything necessary himself or herself to make it work. Here are the skills to sell.
“…1. Create systems for everything. If you have systems, make sure they are documented.
2. Delegate everything. When your business can operate day-in and day-out without your hands-on oversight, you have a money making machine that will attract buyers. Identify the three things you absolutely love to do in your business and the three things only you can do. Delegate the rest…
3. Develop a succession plan throughout the company… If there is a plan to move employees up through the ranks or at least, in smaller companies, to assume greater responsibility over time, it should be much easier to transition your company when the time comes.
4. Plan for scalability….”Scalability means the potential buyer sees increased revenues without vastly increased investment of time and money.
Some business owners when they have gone as far as they want to go with one business, decide to start over with a new one. “Serial entrepreneurship” allows new perspectives and can, if done thoughtfully, be a way to keep yourself fresh.
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.