by Karen Stern
When approaching succession planning, there are three things for small business owners to consider:
1. The challenges facing business owners looking to transition
2. How exit planning can mitigate those challenges
3. What the exit planning process entails
The first challenge for business owners is the inherent risk in small business ownership. Many business owners have their financial wealth tied up in their organization, and the main challenge becomes harvesting that wealth and maximizing value. The other challenge is the transition itself. Owners face daunting odds when attempting to sell their businesses, especially when trying to do so without giving significant concessions. However, business owners can significantly increase their transition success with an exit plan.
A good exit plan can address all variables that challenge business owners looking to transition and create a holistic approach to get you from where you are to where you want to go. The exit planning process consists of three to four phases: discovery, preparation, decision, and, potentially, what comes next. In the discovery phase, your team of experts will assess your goals and create an action plan tailored to your needs. Next, the preparation phase involves assembling deliverables: conducting a valuation, exploring areas of potential improvement, and scrutinizing buy-sell agreements and third-party action plans currently in place.
Using those components, your team will build a framework to assist you in the third phase of the process: deciding to either grow or exit your business. That decision and what comes afterward is up to you and your stakeholders.
Ultimately, planning for your business exit is the best way to ensure that you are appropriately equipped for all types of outcomes. To learn more, contact David Killion, Brown Smith Wallace Transaction Advisory Principal, at DKillion@bswllc.com or Jason Buhlinger, Brown Smith Wallace Forensics and Business Valuation Partner, at JBuhlinger@bswllc.com.
Karen Stern, CPA, (firstname.lastname@example.org), partner in charge, Brown Smith Wallace Entrepreneurial Services Group, provides tax and accounting services for companies ranging from start-ups to $20 million in revenue.