Why “Why” is the First Transition Roadmap Mile Post
By Tom Kirk
Below are a few of the options to consider if you are thinking about transitioning the ownership of your business. Depending on which of these you may choose, there are a myriad of additional related considerations that follow.
Stock sale or asset sale
All or partial
Immediately or over time
Internal or external purchaser
Outside or self-financed
These choices have strong arguments supporting / opposing each of them. For instance, a case can be made that a stock sale is the best course of action from a seller’s point of view. But purchasers are often more interested in buying assets for many very good reasons. Or, a group of your current employees may be ready and eager to take over the business, but an external purchaser has the capital this will require and the employees do not.
There are mountains of resources that describe these strategies in detail, their pluses and minuses and when they may be a successful tool in a business transition plan. If you have not gone brain-numb while trying to learn and understand each of these options, you can be thinking about your own situation and how each of these strategies might work or not work for you.
This approach to the business transition landscape can create a lot of conflict and confusion. The challenges of orchestrating a successful business transition defy simple solutions. A friend of mine calls this hitting a ceiling of complexity that you just can’t seem to break through, which can be very frustrating.
That’s because looking into your various business transition options first is putting the cart in front of the horse. Options like those listed above are focused on “How” a business transition might be accomplished. But this cannot be successfully determined until the following more fundamental and important questions are answered: Why, What and When.
Why do you want to transition your business? There are as many answers to this question as there are people. Answers can include you are bored, sick or just getting older and want to spend more time involved in other activities while you still have the good health to do so. Maybe it is good stage of the business cycle to get out, or you want to start a new business and transitioning your current business will give you the time and resources you need. There are no right or wrong answers. The only requirement is honesty to one’s self.
What are you hoping to accomplish, for you and for others? Maximize your sales price? Assure business continuation? Expand the business? Provide financial security for yourself and your family? Here you want to list all your wants, then go back and identify “deal breakers”. These are the things that must be accomplished or there is no deal.
When do you want your business transition completed? Immediately? 1,2,3 years? All at once? Piecemeal over time?
With the answers to these questions as your foundation, you can now look at each of the various “How” strategies and options in that light. By comparing each of them to your why, what and when answers, certain strategies will rise to the top of your consideration because they accomplish what you now more clearly understand is more important to you and the other strategies will be discarded. This allows you to stay focused on developing your Transition Roadmap of the actions you must take for the reasons that are important to you. This greatly increases your confidence that you are heading toward the destination you desire and greatly increases the likelihood of your success.
That is why we offer The Transition Roadmap Developer™; a transformational process that takes into consideration the practical, financial and emotional aspects of your unique business transition challenge and delivers a customized step-by-step plan of actions.
All small businesses transition eventually. Be intentional about how you want this to happen. Call today and schedule your complimentary consultation with one of our WealthCoaches™ to see if The Transition Roadmap Developer is the process you may want to investigate for improved clarity in this critically important area of your personal and business life.
You should not assume that any discussion or information contained in this publication serves as the receipt of, or as a substitute for, personalized investment advice from FirstWave Financial. A copy of the FirstWave’s current written disclosure statement discussing our advisory services and fees is available upon request.