Business transition planning is simply determining the best way of transferring the ownership and management roles of your business. The majority of entrepreneurs and their families have no transition plan. The chances of a successful transition decreases dramatically with every generation for various reasons. Business failure, an unforeseen event such as a death of a business partner, and future financial security for both you and your heirs are all key reasons why one should consider proactive planning. Once a viable plan is reached, it may take several years and consistent coaching to implement the plan and adjust for changes along the way.
When it comes to developing a succession plan for your business, there is no “one size fits all.” Northern River Financial works closely with you to create a plan that will ensure your years of hard work will be transitioned effectively to maximize the return for the future. By planning for succession, you retain control over the outcome. There are three key steps in develpin
Assess the business by performing a business valuation and exit readiness assessment. Succession planning raises issues of inevitable life changes, of mortality, and of changes in key personal relationships. Should the worst happen, the value of your business often decreases without an effective succession plan. This means your beneficiaries will not receive the full value of the business.
There are three considerations as you plan for transition: personal and financial life planning, business improvements and transition options. Do you plan to continue your involvement in the business, reduce your hours or exit completely? Will you transfer your business to a family member or market it to outside buyers? Once you have sold your business, what source of income will you use in the future to support yourself and your family? Creating a financial plan to prepare for the transition out of business ownership will be an important consideration. Northern River Financial is here to guide you through wealth management, financial life planning and estate planning during and after transition.
It’s time to decide whether to grow or exit. If you choose to risk reward and grow, consider investing in value enhancements. If you chose to sell or transition, explore your options and initiate your transition plan. The business-for-sale marketplace is unregulated and often disorganized. There is no multiple listing service, no centralized, structured source that participants in the marketplace can rely on. To further complicate the task, the process relies upon confidentiality. Selling the business without telling anyone it’s for sale. Because of these factors, there is no “cookie cutter” approach that works for every business, and so each owner must begin with a marketing plan that is unique to their specific needs. We will help you create a marketing plan that determines what makes your business attractive to buyers, who are the likely buyers and how to find those potential buyers and motivate them to purchase. If you are considering transferring your business to a family member, there are a variety of strategies you may use such as establishing lifetime gifts or transferring the business through your estate plan.