Do you have some ideas in the back of your mind about what the succession plan for your business looks like? Are you hoping that a family member or partner will step into your role? Or have you thought about selling your business someday when you’re ready to retire? 

It may seem like these situations are too far off to start thinking about them quite yet—but if the decision involves other people, it may take a considerable amount of time to come to a consensus. Each shareholder will need to determine how long they would like to stay involved with the company and what they want that role to look like, and then adjust their individual plans accordingly. You’ll need to determine the worth of your business and likely have some tough conversations with people who are close to you. It can take years to get the right plan in place.

As difficult as it may seem to broach the topic of succession planning, it’s much better to get everyone’s feelings in the open before it’s too late. We work with a lot of family business owners at DHJJ, and we’ve seen how avoiding the conversation can lead to messy situations with truly unfortunate timing. Our team of advisors has experience with business valuation and accounting across industries like manufacturing, distribution, construction, professional services, and more, and they know the right questions to ask to help you navigate the decision-making process with your family and shareholders.

Succession planning boils down to three basic questions:

What is Your Business Worth?

Whether you’re open to selling your business or not, a business valuation is the first step on the way to determining its future. Even if you’re not planning on going anywhere for a long time, doing a valuation now can give us a ballpark idea of what that number might look like when it’s time for your business to change hands. You’ll be able to make better decisions when you know exactly what your business is worth and what factors might have a significant effect on that value in the future.

You’ll need to gather documents such as tax forms, income, output, loans, liens, and market data to get started with a valuation. Once we’ve determined the health of your business, identified its strengths and weaknesses, and made some key projections, we can make an accurate estimate of the company’s overall worth.

What Do Other Stakeholders Want?

How many people depend on your business to make a living, and are there other leaders on your team who have their own ideas about where the company is headed? And what about your spouse and children? Some people build a family business with the expectation that one of their relatives will take it over when the time comes—only to find out that their son or daughter has different dreams. When two or more people have different ideas about who’s in charge, arguments can erupt. But that doesn’t have to be the case! 

Succession planning is about assessing where everyone stands and putting measures in place to avoid these conflicts before they happen. When you dig into the numbers and start to explore the potential tax impact of your various options, you might find that things are different than they appear on the surface.

What’s Your Exit Plan?

What’s your vision for how you want to spend your golden years? Do you love your job so much that you want to work until the very end, or do you want to hire a CEO to keep things running while you enjoy life in a warmer climate? Or is selling your business an option for you? Will you need to set up a family trust? Once you clarify what you want your future to look like and share that plan with a trusted DHJJ Advisor, you can outline the best-case scenario for your business and your retirement together. 

We’ve been in business for 48 years, and with a team of over 100 people, we cover a deep and wide scope of services. Our team of Exit Planning Advisors has skills ranging from business valuation to value-enhancement consulting, mergers and acquisitions, litigation support, and state and local tax planning strategy. We even do family wealth management and retirement planning. 

Putting off these important considerations until someday when you need the answers can ultimately limit the growth of your business and result in less wealth passed down to the next generation. Work with a DHJJ advisor to ensure that no opportunities are missed and that your family is still getting along when it’s time to hand off your business!

So what comes next for your business, your shareholders, your loved ones, and your retirement? Get in touch with us and let’s start the conversation today.