More than 80 percent of business owners have no formal transition plan according to The Exit Planning Institute’s 2013 State of Owner Readiness Survey. And, some estimates say that there are between 25 million and 27 million small businesses in the U.S. that account for approximately 60 percent to 80 percent of all U.S. jobs.
Think about that for a minute and it’s a little scary — 80 percent of businesses are potentially at risk because they have no plan in place, which also places their employees at risk. Is your company one of the 80 percent that doesn’t have a plan? As we come to the end of the year, it’s a good time to start thinking about the future of your business and your long-term goals. Take steps now to ensure the future of your company.
We understand that for most business owners, who are mired in the day-to-day operations of their business, it can be difficult to think about the long-term, especially when you may be years away from even thinking about retirement. However, owners should start planning years in advance of their retirement in order to improve their chances of achieving their goals.
As a business owner, you work to regularly fix problems, remove roadblocks to success, identify opportunities, and more for your business. You should be doing the same thing with your transition plan. Business transition planning is something every business owner should start thinking about now because no one wants their years of hard work, money, blood, sweat, and tears to be all for naught.
There is a common misconception that a business transition plan is something that’s final and even morbid. In reality, it may be the owner’s ticket to financial freedom for the rest of their lives. However it also needs to be flexible for changes in your business, life, and goals.
Owners should start thinking about their business transition plan early in the life of a business so that they can develop a strategy that will help them achieve their financial and personal goals…both short- and long-term. It will also help to ensure that your business, employees, and family are protected should something happen to you.
There are a couple of things to keep in mind as you start thinking about transition planning:
- Start as early as possible to ensure the best outcome.
- Determine how and when you are going to communicate your plan to those who will be affected, such as family members and business partners.
- Realize that this is a process that lasts as long as the life of a company and will need to be continuously refined and updated.
- Find people you trust to work with you on planning, including business transition planners, estate planners, attorneys, accountants, insurance providers, and business appraisers.
The planning process can provide a business owner with direction and real vision for his or her business, identify opportunities for growth, and determine areas that may need improvement. Going through these steps is usually an eye-opening experience for the business owner.
It can help you maintain discipline in running your businesses. It also greatly increases the probability that you can transition out of your business when you want to and on your own terms.
Most owners will only go through the sale of one business in their lifetime and it is usually the largest financial transaction of their life. Don’t leave the outcome to chance. Put a plan in place to achieve your goals and secure your financial freedom!
[Photo Credit: Robin Grotke via Flickr]
This article was syndicated from Business 2 Community: When Should You Start Thinking About Business Transition Planning? The Answer Is Now
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