Single Store Owner

OCT 2016

Issue link:

Contents of this Issue


Page 55 of 79

56 / Convenience Store News for the Single Store Owner / OCTOBER 2016 FROM THE EXPERTS How to Create a Transferable Family Business These seven concepts will put you on the right path to protecting your value Concept 1: Think About the Big Picture Standing still in today's business environment is not an option. At any time, unknown forces in the economy and your industry can put your business and wealth at risk. By taking the time to define your vision for both the company and yourself, you will have the foundation for meeting these threats. Without this, it is likely that you could remain trapped in your business, or not receive the value you expect when you exit. Whether you decide to keep or sell, what actions and deci- sions are you making today that: make you and the business ready for the future; protect owner value; and increase the likeli- hood of a successful transition to a new owner? Concept 2: Immediately Begin the Planning Process It is critical to commit to an assessment and review planning process. Take a fresh look at your current strategic corporate and personal planning to uncover the threats, and also identify the opportunities that can make your vision a reality. There are four steps in this process: • Review your personal and business goals and objectives. • Determine your financial and mental readiness. (A personalized and confidential report that measures readiness is available at Register/91A6A461_8148.) • Explore and understand your transfer options. The alterna- tives include internal transfers (family, key executives, shareholders, etc.), external (outright sale), and strategies for unexpected events such as death or disability. Each are tied to a different value strategy. • Review your financial, estate and wealth/investment plan. You should ensure that this is aligned with your transition plan and family wealth plan. Concept 3: Determine Valuation Strategies How much money will you need when you exit? With a majority of your wealth trapped in an illiquid business, how will you get your equity out if needed? You may discover the business may not be transferable for the value expected during lifetime or death. Understanding the value of your business and how it fits into your financial and estate planning is critical. Do you know what your business is really worth? You may know an approximate value, but it can be misleading. Actual value will depend upon the transfer method you choose to ac- complish your business and personal goals. There are a number of valuation options available. They are directly affected by the purpose of the valuation, the transfer method available (i.e., employees, sale, shareholders, family), and/or type of buyer (strategic or financial). Concept 4: Explore Industry Activity & Trends Evaluate the trends in your market to determine what future owners value in a company they may buy. Assess competitive position and comparable values within the industry; who may be available as a future owner; and consolidation trends. Gath- ering industry intelligence will contribute to your preparation for making decisions when the opportunities appear. Concept 5: Measure & Manage Your Company's Owner Dependence The value you receive for your business often depends on how much control you want to maintain. Reducing the level of your company's dependency on you likely increases the value. For example, if you want to keep some control through a sale to ex- ecutives or shareholders, then you are likely to receive a lower value than you would with a sale to an external buyer. Concept 6: Attract, Keep & Retain Executive Talent Talented executive managers are a value driver for your com- pany. Determine where your key executives rank in terms of skill and ability to operate the business. Make sure you have the best people in place to help the business grow. Then, provide incentive-based compensation programs that align the execu- tives with the company's goals and succession plan. Do not rely on salary and bonuses alone to keep them. Concept 7: Leadership, Communication & Collaboration Don't go it alone. How often do you gather an advisor team to- gether to review and make sure all of your planning is on track to accomplish your goals? Conversations with your advisors, family and the executive team about your objectives are essential. Take time to learn about their expectations and concerns. Explore goals for the business and key strategic issues, including contin- gency plans for unexpected events such as death or disability. Also, you may want to consider working with an independent advisor who specializes in business transition planning. They have the experience to provide leadership and "quarterback" the process, in collaboration with you and your advisor team.

Articles in this issue

Links on this page

Archives of this issue

view archives of Single Store Owner - OCT 2016