5 Key Steps to Transitioning Your Business
A 2017 survey from BDC, revealed stunning and thought-provoking statistics:
- Almost 60% of Canadian small and medium enterprise owners are aged 50+
- 41% of all entrepreneurs expect to exit their business in the next five years. That’s about two million businesses across Canada
- 71% of those looking to exit are reluctant to take risks to improve the performance of their business
- 52% have little interest in expanding
- 22% plan to wind down their business and sell assets
In The Business Transition Crisis I predicted this would happen and as a result we developed a process for preparing your business for transition and sale. The book concludes with these five recommendations:
- Make time to think ahead. Get your nose off the grindstone and reflect upon the bigger picture. Make this the most important activity in your week. It will pay you back thousands of dollars per hour invested.
- Recognize the inevitable. It is an indisputable fact: you will transition your business some day. You can choose to be in control and manage that process or you can leave it to chance. Your business is probably your biggest asset and you are hoping (if not planning) that it will be a major part of your retirement income. Why leave that to chance?
- Plan for your personal transition. You can’t transition your business until you first transition yourself. That means developing a plan for what to do next and how you will spend your time. Without that pull toward something better your default will be to keep doing what you’re doing now. And that may not be in your best interest or the best interest of your company.
- Plan for the transition of your company. Seventy-eight percent of owners who think they will exit in the next five years expect to sell – either to family or a third party. But most owners do not have a plan, just an intention. It’s not as easy as selling a house. Chances are only a limited number of people are interested in buying your business. You want to get it right the first time.
- Begin now to execute that plan, even if you think you are several years away from making the change. It takes time to do this right and get the most value from your decades of blood, sweat and tears. If you think you will exit in the next five years, act now. Do all the things you should have done over the years; dealing with employee issues, upgrading your facilities, getting your finances and books in order, developing policies and procedures and demonstrating a steady increase in sales and profits.
The BDC report is an update and reminder of what we predicted ten years ago. Think about it. Accept it. Plan for it. Do it.
October 3, 2017
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