As a busy contractor, you're focused on the day-to-day operations of your business, but not business succession planning. But it's important to take time out from the everyday operations to think about what will happen to your business when you get closer to retirement. Here are some steps to help you evaluate your options and choose a transition.
1. Talk With Your Family
First things first: Decide what you want to accomplish. The big picture is sometimes the hardest to see, especially when the details of daily business demand so much attention. But take the time to sit down with those you love and talk about your long-range goals. Do you want to stay with this business until retirement, or do you want to try something new? Keep the business in the family? Receive ongoing income after retirement? Having this conversation well in advance gives everyone the benefit of predictability and helps you estimate the resources you'll need to achieve your goals.
2. Know Your Worth
Once you decide on your future, it's important to sit down with a CPA or another business valuation expert so they can determine your current worth. Don't try tackling this one on your own — a professional will go over your financial documents to give you a reliable number appraising the firm's real value. And don't delay, even if you aren't planning to leave your business for several years. Knowing how much your business is worth is the best way to evaluate all your options for the road ahead.
3. Work With a Planner
Now that you know the starting point and finish line, it's time to map the course. Talk to a CPA or financial planner to formulate annual profit plans that will generate the kind of wealth you'll need to meet your objectives. Based on that, work with your staff to come up with monthly strategies and measurable benchmarks to ensure that your plan delivers results.
4. Decide the Best Way to Close Your Business
The reward for all the hard work of business succession planning is that you get to control how your business and your legacy is passed on to others. One way you'll do this is determine how your company will be sold. To consider what's best for you, you'll need to talk to a professional who can give you the pros and cons of your sale options — including selling to a third party, selling to internal employees, or passing your business on to family members.
You can find out more about transferring ownership from the Small Business Administration. When you're ready to pass the baton, SCORE has some advice about helping your successor make a successful start.
When days are busy, years fly by. Don't wait to start considering your future and the future of your company. Careful planning and the right partners can help you prepare for an orderly and satisfying transition.