Succession planning is often one of the most challenging aspects of owning a family business, and selling the company comes with a lot of obstacles. While most owners dream of keeping their business within the family, that is not always a realistic option, and they may have to make the hard decision of who will take over as the new owner. Continue reading for a few essential tips to keep in mind when selling a family-owned business.
Establish A Timeline
While selling a business can be a quick process, especially with the help of a professional business broker, family businesses have to think about the sale years in advance. This is because owners need plenty of time to position their business for sale and prepare themselves and their family before letting go of the company. While this is not possible for everyone, as some businesses need to be sold as a result of an unplanned reaction, the more time there is to prepare, the better it will be for the future of the company.
From the operational perspective, owners also need time to clean up the balance sheet and secure contracts with important vendors and partners. If the business requires real estate, it is possible that long-term leases may need to be in place before the sale. Owners may also need to lock down agreements with their essential employees and management team. While it is a long process, these steps help to add value to a family-owned business when it is time to sell.
Consider The Financial Impacts
As a business owner, it’s crucial to think through the financial impact that selling a business will present. These issues can be complex for a family business, as many family-related experiences such as travel, entertainment, or even charitable endeavors may be contained within the business. Owners should understand how much money they need from the sale to be financially stable and to keep their lifestyle fairly similar once the company is sold.
Look At The Business Like A Buyer
For a family business owner, their business is a significant part of their life, and it can be difficult to have a realistic view of the selling process. It helps to view the business through the eyes of a person on the outside, such as a buyer, to consider the benefits and drawbacks of the company. Consider the appeal of the current leadership from a buyers perspective and the value of relationships with customers or vendors without the current stakeholders’ involvement. For example, if it seems like the departure of the owner negatively impacts the business, it will not be as easy to sell.
Sell With Atlantic Business Brokerage, Inc.
At Atlantic Business Brokerage, our mission is quite simple; we help sellers sell businesses, and buyers buy businesses! Over the past 30 years, ABBI has facilitated the sale of countless commercial properties, businesses, and franchised locations. With our unparalleled knowledge of the business purchase and sale industry and our network of contacts, we offer services to both buyers and sellers that no other brokerage firm can match.