Why It’s Time to Begin Planning Your Ownership Transition
When the topic of ownership transition comes up, one of the most common responses from an owner is, “I really need to do something about that!” All too often, they say this with a tone of urgency, knowing it has already been put off for too long. Even if they know they’ve put it off too long, they may continue to delay ownership transition planning due to uncertainty. If you’re considering a business ownership transition, take a moment to learn more about why business owners often delay ownership transitions, what you’ll need to do to have a successful transition, and how you can ensure a change in business ownership goes as smoothly as possible.
Why Do Business Owners Often Delay Ownership Transitions?
During the life of your business, ownership transition planning can be one of the most complex and confusing aspects. Due to its complexity, it’s easy to procrastinate on planning the transition. While procrastinating can be appealing, it can lead to disorganized transitions that don’t provide enough financial value to the current owner.
When an owner finally decides they might be ready to plan a transition, a frequent comment they make is, “I should have done something about that years ago!” This statement makes a veiled admission that they believe it may be too late to perform the transition in an orderly manner. It also gives the impression that the owner believes the financial value of transition won’t provide them with the compensation they deserve for a lifetime of creating and growing a business.
Often this tendency to wait is due to not knowing where to start. For example, an owner may put off a transition due to them not knowing how to go about ownership transition planning and complete any of the required transactions. As a result, any owner thinking about a business ownership transition should know some basic facts about the transition process and have expert strategic business planning consultants in their corner.
What to Focus on During an Ownership Transition
Ownership transitions, whether internal or external, take years to plan, implement, and execute. The “rule of thumb” timeframe to complete this process can be up to 10 years or more, especially for internal transitions. Part of the reason for this long duration is that ownership transitions are also about leadership transitions within your business.
Due to the importance of the leadership transition process, it’s essential you take time to identify potential leaders. Once you’ve selected key team members who you believe will lead your company to further success, you’ll want to allow them to grow into those vital roles of leadership.
Since transitions can take time, identifying future leaders and implementing leadership training at the beginning of the process will give your potential leaders enough time to gain key experience, as the transactional steps of the transition process usually require a considerable amount of time to complete.
In addition to leadership development and training, you’ll want to prioritize building the value of your business during the years leading up to the completion of the transaction. By focusing on increasing your business’s value, you and the receiving party will benefit.
For those on the receiving side, an increase in value will make them feel certain they’re acquiring a business of proven worth. Besides helping the buyer feel confident in their investment, focusing on increasing your business value can help you receive greater compensation in the sale and heighten your sense of accomplishment for your lifetime efforts of creating and growing your business.
Why Any Ownership Transitions Can Benefit From Strategic Business Development Consultants
As you aim to raise your business’s value and develop your future leadership team, it’s also important to know that ownership transitions require multiple transactions that are usually tedious and challenging. Since most business owners won’t know how to complete these transactions correctly or quickly, having an experienced professional working with you to negotiate all the complex terms and conditions fairly and satisfactorily is invaluable.
How Thinc Strategy Can Help You During the Ownership Transition Process
At Thinc Strategy, we have the experience and understanding to assist with leadership team development, business valuations, negotiations, and transactions. Since we know trying to handle an ownership transition on your own can be overwhelming, we strive to make it easy for all our clients.
Once you contact us to discuss an ownership transition and begin the process, our experienced business development consultants will sensitively guide you through every step. Even better, we will customize the entire transition process based on your firm or business’s culture, size, and organizational structure. Due to our personalized approach, you can trust that we’ll put you on a course of action that will maximize the value of your lifelong work and prepare future leaders for success.Learn more about our ownership transition planning services today. If you have any questions or want to schedule a free consultation, please contact us.