Planning a business transferJean-Claude Desnoyers
Are you planning to transfer your business? You are planning to retire in the next two to five years and would like to make a smooth transition. It’s a great idea to plan. The transfer of a business has several aspects to consider in addition to the financial one. How to properly plan the transfer of a business? What aspects should be considered? I can tell you more about this by presenting some important avenues that sometimes seem to be overlooked.
Maximize value and profitability
In order to ensure a smooth transition between the current owner and his successor, it is important that the needs of both parties are met.
Indeed, the seller will naturally want to maximize the value of his business at the time of the sale. The buyer wants the business he acquires to be the most profitable as possible in the future. How can this transaction meet the needs of both parties?
For the seller, it is best to start preparing for the transition of his business from 2 to 5 years before the transfer.
In order to ensure that the purchaser obtains all the information necessary for the purchase of the business, it is important for him to get proper financial information. If, during the transaction, the financial information provided is of high quality, the purchaser will find his purchase less risky than if he bought a business with little or no financial information. He will know what he is buying, rather than buying a “black box”. Financial information can also be useful to identify ways to increase profitability and thus value.
Doing business with a professional for this step will allow you to get a detailed analysis of the financial statements. If there is a lack of information that must be known to the buyer, you will know and will be able to produce it. In addition, you can have your business appraised and know the true value. As a result of this assessment, you will be able to take the necessary steps to increase its value and profitability. It is very important to do business with a chartered business valuator for the appraisal of your business in order to have the true value.
What are the technological tools you use or could use to optimize the performance of your business?
Some processes might be automated to increase productivity, reduce the risk of error or to facilitate the transfer of the business by formalizing your recipe for success, for example.
A marketing analysis tells you more about the profitability of the main products or services offered by your business. Marketing can then focus more on the most profitable products or services. An analysis of your market and your target audience ensures that each service or product is presented to the right clients for maximum returns. From a sales perspective, a marketing strategy can help you make your business more attractive to a buyer; presence on social networks, e-commerce, advertising, graphic design, etc.
As you know, a transition of leadership in a business can be difficult for key employees and employees in general. It is important to consider human resources to guarantee that the transition will be smooth. I am referring here to succession planning. Training of key employees, anticipating the new business structure, separating and assigning new tasks, anticipating the need for new staff, establishing the role of the former owner after the sale, and so on.
Where to find all these departments?
Each of the departments is composed of specialists in the field who can help you plan the transfer of your business so that this transaction is smooth.
To begin the process, contact me. I will tell you more about the steps to follow to ensure a win-win transaction between your successor and you!