In the next 10 to 15 years, half of all small business owners in Canada will retire. That may not sound like a big deal, but we’re talking about well over 500,000 businesses! If you’re one of those business owners, this post is for you. From succession planning to staging for sale, we outline some options and strategies to ease the transition.
For owners of small businesses with a few employees, succession planning might involve replacing yourself with “high-potential” internal people, such as a family member. You may sell them the business, at least incrementally. And, if all goes well, you get to walk away…
For owners with dozens or even hundreds of employees, succession planning is a human resource function—and part of good business management. Work with your HR team and/or an HR consultant to develop a succession plan that best reflects your expectations for retirement.
Selling the business
What if nobody wants to step up? Sometimes owners have no choice but to sell or close their business. For passionate entrepreneurs, the latter can seem impossible to do. Nevertheless, selling may be your best option. Now what?
Valuate your business
Businesses owners love to overestimate the value of their business and brands, which makes letting go harder. Therefore, you may want to commission an objective business valuation. Or do one yourself, following a guide like the business valuation guide at Government of Canada.
Get your books in order
How do your books look? Potential owners expect transparency into all aspects of the business, including its finances/operations, for several years. If your books look messy, transition to a cloud-based financial management solution that helps you put your best foot forward.
Refresh your space
If appropriate, try freshening up your office/workspace. Conspicuous improvements—like cleaning, removing clutter, painting, and getting rid of old furniture—can make a dramatic improvement. This effort can help make your business more attractive to potential owners.
Reclaim the server room
In this cloud era, nobody wants to absorb the costs of managing aging technology infrastructure, like old servers running out-of-date software. So, out with the old and in with the new. Embrace local cloud services. Reclaim your server room. Get some square footage back!
Redesign your website
What’s that? Yes, I’m asking you to publish a new website—just so you can make your business more attractive to someone else. If that seems crazy, consider that most small business owners can publish a smartphone-friendly website more quickly and cost-effectively than ever before.
Protect your interests
If you do plan to sell (even to employees in the family), get guidance from your lawyer and/or accountant. Leverage their expertise to protect your interests and avoid conflict. Above all else, work with them to prepare, review, and revise offers/agreements before you sign anything.
A final little irony
The irony of all this work, of course, is that modernizing your business is a bit like staging a home for sale. When you’re done, you may not want to sell it at all!