Work with advisors to plan your exit strategy
It’s never too early to start planning for the sale of your business. But, it can be too late.
Whether your company is brand new or well-seasoned, right now could be the best time for you to consider how you will exit it. Early planning allows you and your advisors to create a strategy to generate the outcomes you want.
You may want to sell to a large corporation or you may plan to pass control to a family member. There are, in fact, many ways to transition ownership of your business. What is important is that you plan the process carefully.
Start by considering why you want to sell your business. Your plan might be to:
• Take money out of your company.
• Reap the rewards of the time and money investment you have made.
• Retire completely and pursue personal passions.
• Reduce your working hours.
• Leave a legacy to your family or community.
• Start another business.
• Become an angel investor.
It’s also important to know when you want to sell your business and what you want from the result. Ask these questions:
• Do you want to sell within a couple of years or a couple of decades?
• What do you financially need or want from your company?
• Do you want to continue working in the company or consulting with it after the sale?
• Will you start a company in a complementary or completely different industry?
There are no right or wrong answers to these questions. Every business owner will have their own personal priorities.
Build your team of advisors
Professional advisors will help you consider your alternatives, make choices and map out your path to the successful sale of your business. It’s important to work with advisors because an effective ownership transition plan is complex. You’ll need tax and legal counsel, personal financial planning and business valuation expertise.
Create a financial plan
For business owners, identifying the most tax efficient methods to receive income from a business starts early in a business’ life and continues right up to the date the business is sold. The expertise of advisors such as Financial Planners, Accountants, Lawyers and Wealth Management experts can have a significant impact on the financial results you achieve personally over your lifetime.
Your financial plan should also address estate planning, insurance and tax issues such as:
• Creating a Will.
• Establishing appropriate Powers of Attorney.
• Income and Pension Splitting.
• Trust Solutions and Holding Companies.
• Charitable and legacy objectives.
“You may also want to consider a Corporate Will to communicate your specific wishes regarding your business,” suggests Roxanne Bouchard, Centre Director with Scotia Private Client Group. “Talk to your advisor about the benefits to preparing this important business instrument.”
One of the greatest joys to starting and running a business is the opportunity to build it to serve your wishes, to give you everything you want. The trick, of course, is to first identify what you want.
Scotiabank offers a complete financial strategy for your business and personal situation. Access these helpful business succession and transition resources. Speak with a Scotiabank Small Business advisor anytime.
What’s your exit strategy? Will you sell to family or another buyer? Please share your comments below.
By Roger Pierce