Three Questions Every Business Owner Should Be Asking
By Mitchell Fenimore
You can’t plan your life entirely around your business, or your business entirely around your life, but you can plan for the future with both in mind. Whether you are considering selling your business in the future or passing it on to the next generation, it is never too soon to start the planning process.
Below are three important questions business owners should be asking today:
1. What is my business actually worth?
The first step is to gain an objective understanding of your company’s value. That value should be incorporated into your personal financial plan, giving you greater clarity and confidence as you make decisions for your business and your future. Establishing a baseline valuation can be especially valuable. River Wealth can provide preliminary guidance and connect you with experienced professionals who can prepare a comprehensive valuation report.
2. When should I sell and how can I prepare to sell?
Ideally, planning for a sale or succession should begin three to five years before a transition. If you intend to sell the business to an outside party rather than transfer it to the next generation, the process can take six months to a year to complete. The right time to sell is when you are ready, when your business is prepared, and when market conditions are favorable. Two of those factors are within your control.
3. What is my succession plan?
The objective of succession planning is to help position owners to exit on their terms, according to their timeline, and at a fair value. Aligning personal objectives with business goals can help identify the best option. Ideally, transition planning begins years before a transaction occurs. Internal and external succession strategies each have advantages and potential challenges Regardless of your succession approach, preparation is essential to a successful transition.
Starting early improves your readiness and your business’s readiness for a transition. It is never too soon to begin planning. Preparation does not mean you are ready to leave the business tomorrow, it means you will be better positioned when that day does finally arrive.
For more information on our Business Planning service area, click here. Ready to start the business planning conversation? Contact Mitch Fenimore.
Disclosure:
Business planning services are provided as part of River Wealth Advisors’ advisory services. River Wealth Advisors does not provide legal or tax advice. Clients should consult their legal, tax, or other professional advisors regarding their individual circumstances. To review all policies and disclosures, click here.