The Business Transition Blog

Responsible Entrepreneurs Make a Business Transition Plan

  • Are you a business owner over the age of 50?
  • Is your business still dependent upon you to run successfully?
  • Do you have trouble getting away for more than two weeks to vacation?
  • Are you expecting your business to be an important part of your retirement income?
  • Have you made a plan that will provide a step-by-step approach to making it all come together – with milestones, action steps, and measurements to indicate you’re on track?

Let me be blunt. There is no downside to planning. None. Zero. Nada.

There are many potential problems if you don’t plan:

  • You could die, leaving your employees, customers and family in difficult if not desperate, straights. At age 50, your chance of dying before age 65 is 15 percent. While insurance can soften the blow, it doesn’t replace you, your skills, your knowledge and your relationships.
  • You could become disabled, making it difficult if not impossible to carry on your duties. The uncertainty of whether or not you’re capable of running the business could lead your employees to quit, customers to leave, and suppliers to withhold credit. At age 50 your chances of having a serious disability before 65 are one in three.
  • You could receive an offer for your business; however, because you weren’t prepared, you could sell it for less than it’s worth, miss your best opportunity, or give up confidential information to a prospective competitor.
  • You could blindly continue to expect your business to provide for your retirement when you sell it. Less than one of four businesses put up for sale are likely to find buyers, so if you’re part of the majority, what will you live on?
  • Your valued employees could ask you what your plan is and if you can’t answer the question, they might leave. They need the security of knowing that when the time comes for you to move on (either by design or default) there is a sound strategy for growing and sustaining the business. Forty-six percent of employees would leave if they had another job to go to.
  • You could get bored, tired or burned out and decide one day that you’ve had enough. At that stage you may not have the mental stamina or right attitude to do what’s necessary to get the most value from your business while ensuring that it continues as a viable business.
  • Your industry or the economy could slump. Customers could stop buying through no fault of your own. Many companies are still recovering from 2008.
  • You could count on your senior manager(s) to be there to run the company, but they have the same human vulnerabilities as you and might decide to retire early.
  • A major competitor could set up shop next door and have deep enough pockets to drop their prices until you go out of business. Think big-box operations like Wal-Mart or Home Depot.
  • Technology could change and render your business redundant or too expensive in its traditional form. Think e-Bay, call centres in India and book publishers.
  • Your best customers could go out of business leaving you with their outstanding accounts receivable and facing a loss of future business.

The list of risks is lengthy. Without a plan you can be surprised and vulnerable. A plan won’t prevent all these problems; however, a plan puts in place strategies, relationships, contingencies, and funding to minimize the negative impacts that lack of planning can have on your business and those depending upon the health of the business for their livelihood.

Planning doesn’t solve all the problems, but it gives you an opportunity to assess the risk objectively and thoughtfully in advance and then come up with alternatives, options and strategies that may require time to implement. Without forethought, your options can be very limited.

Although I’m an optimist by nature, over time I’ve become a realist and I look for ways to mitigate my risk and increase my odds of winning. There is no downside to planning and many good reasons to do so. If you’re not sure how to get started, join us for a very informative seminar on March 29, 2011 at Langdon Hall in Cambridge.

What Every Boomer Business Owner Should Know about Business Transition (Before it’s Too Late!)

See details here.