WHAT IS YOUR FAMILY BUSINESS’s SUCCESSION PLAN
By Eric Gilboord, Columnist
I’ve noticed lately how older Owner/Operators tend to view business transitions differently than younger. It has been interesting to watch the changes in attitude over the past few months, as it relates to their opinion on transitions.
Some older, late 60’s into their 70’s and even 80’s are just now taking the whole “I better think about succession and transitioning my company” idea seriously. Usually the conversation quickly jumps to how fast can I sell. Conversely, my conversations with younger Owner/Operators in their 40’, 50’s and early sixties have demonstrated that they realize now is the right time to plan ahead. Typically they are thinking about a 15 year window to transition. Asking about growing the business significantly, either organically or through acquisitions and generally running a growth oriented, tighter ship are key talking points. Being prepared mentally and physically for serious scaling is also important.
There are always exceptions and regardless of company size or age, or your age or ambition, it’s never too early to start working on your succession plan. Here are 3 steps you can take right now to grow the value of your company whether you plan to sell or not.
Step 1 – Clean Up
After several years of running a successful company it’s easy to keep relying on the old proven ways. Maybe the time has come to clean up the office physically, update finances in general, im- prove operations, re energize sales and marketing, get rid of the people holding you back and bring in new blood where required. Basically put your house in order. Position yourself for growth and or transition.
Step 2 – Grow Up
If you want to be a bigger more valuable business you need to act like one. Don’t be afraid to go after bigger projects or sales. Present yourself to customers and prospects as you want them to see you. One of the many things you’ll need includes better processes, well documented and executed by everyone in the company including you.
Step 3 – Scale Up
Get aggressive, plan big and don’t be afraid to fail. Years of success can make us lazy and fall into a cruise control style of running the company. Who better than the Owner knows where the hidden opportunities are and what needs to be done. Go and sell your company for 300 per cent more than its current value. Leave a legacy your children, grandchildren and great grandchildren will talk about for years to come
Excerpt from my book: Moving Forward ‘ Get the Triple Effect – Sell your business for 3 x more and 3 x faster.’ If you don’t prepare properly, the fallout will be far worse than you think:
- Your spouse/family will be left to run or sell the business. Your spouse may be forced to work with your partner. That goes two ways. How would you like to be in the position of working with your partner’s wife? Sobering thought isn’t it.
- Company value will drop dramatically because you are not there to run it. In many cases you are the business. Want to find out if that’s true?
- Your employees may end up out of work.
- Customers are not quite as loyal as you think.
- Competitors will be circling your customer list within minutes.
- In case your big plan is to die with your boots on. Good luck. You will likely be leaving a legacy and a mess. They’ll definitely be talking about you. Maybe just not in the way you hoped.
If you don’t want this to happen you have 2 choices:
- Sell now, knowing it will be significantly harder than you thought, and you will realize far less payment for the business. The terms of the sale may not be exactly what you were hoping for, or even close. You’ll have little choice and be forced to be content with the deal however it turns out.
- Start getting your business ready for a successful sale or transition and have the future you always thought you could have. Become a company desired by Buyers. Sell for the amount you wanted or possibly far more. Sell on your terms.
- You can’t properly do #1 or #2 without a plan and a team to implement it. It’s really not much more complicated than that.
About the Author: Eric Gilboord is the CEO of Warren Business Development Center Inc. specializing in buying, selling and building company value of small and medium-sized businesses. He has worked with hundreds of businesses over the past 23 years. Eric is a management consultant, speaker, the author of several books, a columnist and the creator of hundreds of articles, seen in national newspapers and magazines, online and read regularly via his weekly emails and interviewed regularly. If you’d like to know a little more about our Transition Roadmap please click here. Or to engage me as a speaker please visit: www.ericgilboord.com www.warrenbdc.com