Dec 2011
The Four Steps to Leaving Your Business Successfully
By Paul Cronin, partner, STPI
For business owners and their advisors, there are four steps to successful transition planning or transferring of the business.
Most people can think of the practical, financial and technical ("wallet") aspects of a transfer, but what can derail even a "good" deal are the emotional and intellectual ("head and heart") aspects. Unfortunately, most advisors are not trained to help their clients with "head and heart" issues
So here is a 4-Step process to follow, to ensure that all of the aspects and issues are addressed:
1. Make it Better:
Owners who document their systems and processes will make their business more valuable and easier to run. Operations, HR, Sales & Marketing, Finance, all have processes, some formal, some less so. Building a plan with a consultant to make all of these processes work better and put the company on a strong growth track will make the business better and more sell-able.
2. Make it Matter:
Owners who spend some time reflecting on who they are and what they want to accomplish in the future, will enjoy the transition process far more than those who don't. Simply put, the transfer process will matter more to owners who see it as PART OF their personal transition. Such Personal Transition Planning, is at the heart of STPI's programs and often takes several months. This planning will help owners financially as well, since it will show their other advisors that they are "serious sellers". "Owner's Indecision" and "Seller's Remorse" are deadly. Owners who suffer from these issues can kill any chance of selling their business, other than liquidation.
3. Make it Last:
Many owners will depend on the monetary proceeds of a business transfer for some or even a large portion of their retirement funds. As such, the managment of these funds must be geared to last for the balance of their lives (20 - 30 years). This requires financial planning, estate planning and wealth management, and regular meetings with such advisors. "One and Done" is not going to cut it.
4. Make it Happen:
Owners need advice from specialists such as M&A Advisors, Business Brokers, CPAs, and M&A Lawyers who have a solid track record and understand the nuances of business transfers. This process usually takes many months and often years. Owners need to be patient and understand that unless they have transferred a business before, they need to do a lot of listening.
Building a collabortive team of advisors is the key to making these four steps be effective. An owner can try to do so alone, but we recommend that they designate one key advisor (who has shown the ability to help a group of people collaborate) become their "Chief Transition Officer". Owners are running businesses, and will find the process of "coralling the cats" very time consuming. Designating one person to be their CTrO, will make both Life and the transition planning process, easier and more profitable.
About the Author
Paul Cronin is partner and Director of Business Development at STPI. He leads the strategic direction, sales and marketing efforts of the business. With over 25 years experience in sales, management, consulting and entrepreneurship, Paul brings a broad spectrum of professional experience to the Institute.
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