And for those who are business owners, add "selling your business" to the list.
With all that we try to fit into every day, setting aside the time for the truly important and meaningful activities can be/is difficult. Planning and good intentions go by the wayside. Yet not preparing for the sale of our business could cost us the very lifestyle we have worked so hard to build. Isn't it time you start thinking about the life you want when you leave your business?
A CIBC World Markets' report says that some 310,000 of us plan to transfer control of our companies within the next five years, a staggering number that represents half of all small- and medium-sized businesses in Canada.
This is not news to those of us in business brokerage. We are intensely aware that there is a huge retirement crisis coming over the next few years. It was expected earlier but for the recession that started in the fall of 2008. As fellow broker Erik Twohig says, "That recession ate into company value, lowered purchase prices, and, combined with historically low interest rates, decimated post-sale income for some business sellers. However, this delay may only make the ultimate outcome worse for business owners who are unprepared."
Why? Because they will be selling into a very competitive marketplace, which means it's likely that only the most attractive and well-prepared businesses will sell for what they're worth. In other words, we expect it to be a buyers' market.
We also expect that environment will be sustained—the CIBC forecasts that another 240,000 owners of small and medium-sized businesses will retire by 2022.
So that's what's to come. Let's go back to the here and now.
In the article, CIBC economist Benjamin Tal says, "At this stage of the game, a small businesses' principal strength — the reliance on the human capital of the owner in almost every aspect of the business — is also becoming its primary weakness. Adequate succession planning requires time and is often measured in years, not days or months."
So the sooner you prepare your plan the more options and control you'll have. Right?
But what if you haven't even started? Take a deep breath and begin. You're not alone. Our intermediaries can help.
A business broker can connect you to other professionals with experience in business transitions and transition planning – a tax accountant, lawyer, wealth planner, business coach, etc.
Start thinking about the life you want once you leave your business. Will you have enough money for what you want to do next? What will it take to get you there? Our business is usually our largest asset. A professional appraisal will tell you what your business is worth now and its most probable selling price. Our team of professionals can then help you build a roadmap for increasing the value of your business and taking advantage of tax strategies to maximize the proceeds of its sale.
Our experts recommend starting three and a half to five years ahead, allowing at least six months to analyze the business, two years to build value and another year to sell.
You might also want to look at an earlier post I wrote about Leaving Your Business on Your Terms—transition options for small business owners.