by Dave Driscoll
I ran into an old friend recently at Bread Co. After discussing what we had both been doing, the next question was, “What’s next?” My friend said he is retiring next month after nearly 40 years of working for the same company. When I asked about his plans after retirement, he didn’t really have any.
“Wow,” I thought to myself. “No plan to fill the void your retirement will create in your life?” I wish him the best, but I really fear that he will have challenges in his future.
Business owners face the same issue of filling the void, and they must create their own financial security through the sale of their businesses for prices that will support their desired lifestyles.
These five steps will help you develop clarity and begin the process of transferring your business eventually:
1. Define your vision. To achieve a fulfilling Life Beyond Business, you must create the vision – the dream of what Life Beyond Business will look like specifically for you. By developing your vision and actively designing your lifestyle, you will create a powerful lens through which you can consider all of your business decisions. Ask yourself:
a. Why am I here?
b. What is the top purpose for my life?
c. What fulfills me above all other things?
How do you want to live your last 20? If you don’t take time to consider your vision, to define who you are and what you want to give to and receive from life, you are jeopardizing a valuable chance for self-fulfillment. Ultimately, you must define your dreams and begin to consider the costs (financial, emotional and otherwise) to achieve them. But before you decide how much money you’ll need to get there, you have to define your version of there.
2. Determine the value of your business and what drives or detracts from that value. To maximize the value of your business and acquire the financial fuel you need for your Life Beyond Business, research both what increases and what detracts from the business value. Your goal is to maximize your business’s value to combine with your personal resources so you can financially attain your dream. Is there a gap between the value of your business and the cost to achieve your vision? If so, you have to address this “value gap” and map a realistic course to achieve your dreams.
3. Understand the marketplace to maximize salability. Remember, the generation after the baby boomers is 40% smaller, reducing the number of potential buyers for your business. The future demand and value paid for your business will depend on value drivers as defined in the eyes of the buyer. Position your company to be “saleable” to maximize the value of your life’s work.
4. Create a comprehensive game plan. A written plan is invaluable in every ownership transition. Create the plan with input from your group of trusted advisers, including your upper management, financial planner, attorney and accountant. Establish the road map that you and your company will follow to help you realize your dreams.
5. Develop a strong management team. Lack of a strong management team can be a deal breaker for a business sale. Can your business successfully and profitably operate without you? If not, take steps to delegate and make your business less owner-dependent.
Transitioning to retirement is an exciting and challenging time, and some intentional consideration and planning years in advance can help you achieve your Life Beyond Business.
Dave Driscoll is president of Metro Business Advisors, a mergers and acquisitions business broker, business valuation and exit/succession planning firm helping owners of companies with revenue up to $20 million sell their most valuable asset. Reach Dave at DDriscoll@MetroBusinessAdvisors.com or 314-303-5600. For more information, visit www.MetroBusinessAdvisors.com
Submitted 8 years 147 days ago