How do you prepare for when you are ready to exit the company that you started? Good morning everyone, and welcome back to Finance Friday … on a Saturday! We’re continuing with small business month and today we’ll look into 3 reasons why you should prepare yourself early with a solid Succession Plan. While creating a Succession Plan can be complicated, emotional and time-consuming, the cost of doing it will always outweigh the cost of doing nothing.
The first reason is to realize and confirm what your end goal is. As a business owner, you need to answer the question: “Am I ready for retirement or do I want to still be involved in some way?” Once that question has been answered, you must look at how your exit will affect your personal financial goals and current lifestyle. Certain expenses, like healthcare, may be impacted as well as your main income stream. Answering these questions early help make your plan closer to reality.
The second reason is to begin to prep a team of professionals that can guide you. Your Financial Planner should have a network of different individuals that will be needed for this type of transaction, including a CPA, an Estate Planning attorney, a few business brokers and a business valuation company. The earlier this team can get set up, the more prepared they will be when the time comes when they are needed.
Finally, coming to terms with the emotional component. The hardest part of Succession Planning is the emotional attachment that a business owner has with their company. Many business owners can’t visualize themselves without their company. There has been so much investment, including blood, sweat and tears, that has gone into making their dreams a reality and now they are facing the decision to walk away. The emotional attachment is something that has to be faced in order to make a savvy and sound business decision when the time is right.
Now it’s your turn. What would do to plan early for succession of your company? The email is still hector@hrcfin.com, for questions and thoughts on our discussion. Don’t forget to follow HRC Financial on Facebook and LinkedIn for more Finance Friday Tips and Insights.
Thanks again for your time and we’ll see you next week for another Finance Friday!