Sometimes the people who can get you to really think about what's next - how long you want to keep working, what will happen if you suddenly can't work, how much you want to work, what selling could look like - are spouses, children, and employees.
Who in your life wants to know - deserves to know - what your succession plans are?
Even if you're scared, overwhelmed, or intimidated by the prospect of things changing, might the concerns and need for clarity from people you care about be the encouragement you need to prioritize finding someone to talk with about business exits, leadership transitions, and ways to preserve your legacy?
The questions my client's employees were asking her about the future combined with her growing desire to work less got her to make the call.
“I thought I’d work forever and forever is now,” is what she said when I asked her what had changed, and why she was reaching out to talk about selling her business.
She took a sip of her coffee and said, “I’m well past retirement age, my employees want to know what my timeline looks like, and I don’t want to work this hard anymore. At the same time, I’m trying to cut back on my hours but I keep going to the office. I’m freaked out about what I’ll do when I’m not working but also tired and ready to work less.”
“This all makes sense and almost every business owner I talk to can’t imagine not working. Frankly, I’m really glad your employees have been bugging you for a plan and you’re ready to talk.”
“Yeah, it's time. I’d like to start slow, maybe with an with an emergency succession plan and go from there.”
I smiled and said, “That’s a great place to start. That process will open up your thinking about how you run your business, what you might want to keep doing while you scale back your hours, and what legal documents and internal processes you need in place to ensure business continuity in the event you become incapacitated (or fly off for an extended Tahitian vacation.)"
“Oh, I’m the only one who writes proposals, does invoicing, does the banking - there's a lot of things that no one else does,” she said.
I exclaimed, “I know! That’s why your employees want to know what the plan is and I want to help you train them to do these things so a potential buyer will be confident that the business can run profitability without you.”
She smiled, lowered her head and raised her eyes, “I get it. I’ve just never had to train anyone on the things I do and so many little details and nuances live in my head.”
“Yeah, " I said “and it means that you’ve built a $3m business with one hand tied behind your back.”
"My job is to help you think about what will make your business most attractive to potential buyers and create as many of those conditions as possible. High owner dependence makes your business less valuable. So does a lack of standard operating procedures and cross-training.”
I went on to say, “For you to work less, others need to work more or we need to hire other people to take on different roles. You need to train them and let them practice doing new things. You need to teach them all the things you do instinctively that make this business successful.”
She leaned forward and said, “I do have one person I’ve been showing how to do some things and she might even be interested in buying the business.” she said. “It’s important to me to help her do that when we’re both ready.”
I smiled and said, “That’s so good to know. What a wonderful thing to work toward!
I made a note and explained, “that means it’s also important for you to start making financial decisions based on demonstrating consistent, reliable cash flow. If your employee eventually needs a bank loan to make this deal work the bank will want to see the numbers that tell them the business can service the debt.”
“Fortunately, we have time to document, train on, and delegate your responsibilities before we go to market. And we have time to get your financial documents in order in anticipation of due diligence and an underwriting process.”
With a sigh and a smile she said, "It's a good thing I’m not ready to be ‘done, done’ tomorrow. This sounds like a lot of work!”
“It is.” I put down my pen and said, “which is why it's always best to run your business to be exit ready and transferrable regardless of whether you are ready to or interested in selling. Now the most important thing is to get started and make these changes."
“Let’s get focused. I’m ready to do it,” she said, sitting up a little straighter in her chair.
Getting focused helped this owner increase revenue 34% and profit 137% YOY, update her estate plan, review her wealth management strategies, create an emergency succession plan, identify a prospective buyer, and set an asking price 40% higher than initially anticipated.
Even if you think you’re going to work forever, you might change your mind. Let’s talk about integrating succession planning and value acceleration strategies into your annual growth plan to position your business to be as appealing as possible to potential heirs or buyers. That gives you more business exit and transition choices whenever you decide to change your role in the business or sell.
