Your designed destination is just that – designed. Very few, if any, business owners can give a finely detailed vision or strategy for their lives after retirement. Even the most mature entrepreneurs may rely on just a feeling or abstract dream that comes to mind when thinking about retirement, still lacking a developed plan to reach that destination. This is why the first step of Ownership Conversion Planning is to develop a clear idea of where you want to go in your business and your personal life. Through my years of experience, I’ve recognized key elements that help locate your designed destination. Here is a partial list of what you will need to assess:
Vision. When you picture your perfect future what does it entail for you, your family, and your business? Consider your heirs, what do they expect from the company? How do you see their role, today and down the road? What will it take to manifest that dream – what income, equity, and security will you need?
Motivation. When the time comes, how involved do you want to stay in your business? Do you anticipate staying on-board full-time, maybe staying involved for a limited amount of time, or would you rather make a clean break and totally cash out so you can move on to your next adventure?
Capability. Your business doesn’t exist in a vacuum, real-life pressures can place limitations on your planning. Ask yourself, are there any personal or business commitments that are impacting your goals and how you bring them into fruition?
Security. It’s necessary to look holistically at your financial resources. Consider what resources are currently at your disposal, and what you will need to meet your retirement goals. Also, consider the lifestyle needs of you, your spouse, and your family.
Contingency. Every good plan is reinforced by a backup plan. If something unexpected happens, what do you have in place to protect you and your family?
Value. As a business owner, do you know the true value of your business? Do you have a plan to maximize the value for you and your family? Would you know how to maximize the true value of your business using a structured plan? Are you aware of the effects of various liquidation options, and are you informed enough to select the best option for your business?
Variables. While there are many commonalities between internal and external sales, it’s important to consider the nuances that come with each type of Ownership Conversion. Is it your hope to sell to an outside buyer or a third party buyer? Do you anticipate transitioning your business to the next generation? Or, maybe you plan on a combination of both?
Planning for your future is intrinsically connected to where you’ve come from and where you are today. Your personality, your strengths and weaknesses, and all your lessons learned are all pushing you forward. But, without a plan, you’re a ship without a captain. In order to gain control of your ship, you have to take stock of your experience and your dreams. To fill the holes in your plan, work with a trusted team of professionals to fully develop your Ownership Conversion Plan.