Selling Your Business

With a tough economy, many business owners are thinking that they might be better off to sell their businesses. At the same time baby-boomer-business-owners are arriving at the stage in their lives that they would like to retire from their enterprises.

Of course, the credit crisis is making it almost impossible for buyers to get financing. What to do? One option is financing by the seller. While the seller might like to get a lump-sum payment, financing may provide a steady income stream. But there are risks. If the buyer drives the business into the ground either through mis-management or inability to cope with economic conditions, the seller may be left with an empty bag.

My friend and colleague Ted Hill has developed an innovative succession plan that reduces the risks. His plan requires implementation at least three to five years prior to selling (but maximizing the sales value of any business requires that amount of time.) Under Ted’s plan, a business owner will recruit a bright young person in her or his 30s. The recruiting process will include a battery of tests to assure the right temperament for owning a business, and the aptitude to do so. The protege will work hand in hand with the business owner learning all aspects of the business, and the owner will be able to observe whether the individual really has the right stuff to take over the company. The owner will then retire from the business and will finance the transfer of the business, giving the retiring owner a steady income stream with minimal risk.

I have somewhat simplified Ted’s innovative approach. But it is a fine alternative.

Will Limkemann
440-871-0976
www.neobizadvisor.com