At some point, every business owner will exit his or her business –horizontally or vertically. Those of you who plan properly can leave your business in the style you want and desire! Those of you who don't plan may be in for an unwelcomed surprise - you may never be able to leave your business on your own terms. Statistically, that’s 85% to 90% of business owners. What can you do to leave in the style you want and desire?
It's really quite simple...PLAN!
- Establish Your Objectives - You need to know when you want to leave, how much you need after taxes and to whom you will transfer your business.
- Determine the Value of Your Business - Get a formal valuation and conduct a reality check. Not all valuations are created equally. When you are reviewing your valuation, take the emotion out of it. Put yourself in the shoes of the buyer. How much would pay for the business? Always remember, buyers pay for history and buy for potential.
- Preserve, Protect, and Promote Value - This is the time you want to run your business for the buyer. There are many ways to increase the value of your business. One sure way is to increase the cash flow.
- Convert Business Value to Cash - This is important for business owners who sell their business to an outside buyer. Work with a CPA who understands transactions and how to minimize your taxes. Some of you may need to begin this process ten years prior to your exit.
- Sell Your Business for a Note - If you plan to transfer the business to family member, co-owners, or employees you must plan ahead to maximize your financial security and minimize your taxes.
- Have a Contingency Plan - You must put the proper contingency plans in place so the business will continue if you die or become disabled.
- Plan Your Wealth Preservation - You must also protect and provide for your family if you die or become disabled.
Visit www.dovetailadvisors.com to learn more about our Five Step Planning Process
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