The importance of succession planning
Whatever your reason for starting a business, there could come a time when you decide to sell.
Whether that's purely for profit, because you want to start a new venture or for personal reasons, getting started on your sale of business planning early makes the whole process a lot easier.
In this article, we look at four of the questions you should ask yourself to help make the sale of your business as stress-free as possible.
- How much is your business worth?
Before you think about selling your business, you need to find out what it's worth. Speaking to a business broker will give you an idea of what price to expect if you were to sell.
If this isn't as much as you were hoping for, your broker can also give you some suggestions for how to get your desired figure.
- Can the business succeed without you?
Often, a business only works because of its founder. You have to make sure your business will still be worth buying if you step away.
This could mean investing the time and money to upskill your staff so that things will keep ticking over when you're gone.
You should also make sure that you have all your processes documented, so that the new owners can see how to run the business and to cover any losses in trained staff.
- Do you know how to talk about your business?
The idea of an elevator pitch is long-established, but it's never more important than when you're talking about the sale of your business.
You need to be able to talk coherently about what your business does, what benefits it offers and what its potential for growth is. Knowing a few stats about profit, growth and other relevant figures will also help.
By getting these details clear in your mind and in a way that you can communicate quickly, you'll stand a better chance of hooking interested buyers when you speak to them.
- Who is your target buyer?
The three most common ways to sell a business are:
- to a family member, often a child who'll be taking over
- to a staff member, someone who has experience of the business
- to the highest bidder, a person or company that is impressed by what you've done and the opportunity for your business to grow
Most business owners will have an idea of who their successor will be. If it's a family member, you want to make sure that everything is in the open so there's no tension.