Planning to exit your business
Have you thought about what will happen to your small business when the time comes to close your doors or pass it along to another person? Many small business owners have the desire to pass their business on to their children or a close loved one. If you are ready to exit your business, there are multiple steps you will need to follow in order to close your doors or pass the keys to another person. Depending upon how large your small business has becomes, you will need to start the exit strategy planning process early. Some businesses take a year or more to pass the keys to a new manger while others can make the transition in just a few weeks.
Agreement and Authorization
The first stage to plan is the agreement and authorization to exit your business. This will basically state that you are dissolving your business and here is how you plan to do it and who will now be in charge of it. Include things like the governing set of rules and make sure that all the loose ends are properly tied up to end the business in a timely and correct manner. The agreement and authorization form must include the individual that will take over along with the teams within the organization and who will be in charge of them when you step down.
As you move toward stepping down from your business, you need to seek out legal counsel that will help you to properly close your doors or help you make the transition. Your legal counsel typically consists of your Certified Public Accountant (CPA), your attorney, and a business broker. Each of these individuals will provide different expertise in a variety of fields in order to help you with the transition phase. They can also help with things such as organizing your business records, reviewing your transactions, and tying up your loose ends.
Inventory and Asset List
Another step you want to take is to ensure everything is properly accounted for. Create an inventory and asset list. This will help you to see what things you are transferring to the new owners and to dispose of assets that the company will not need or belong to you personally. This is an important step you will need to take in order to calculate your taxes properly and to pay them correctly. To reduce the tax burden, consider donating some of the assets to charity. You must meet with an appraiser to get the true value of the assets and inventory items that you are transferring.
Before you step down, you must also take the time to create a list of all the jobs within the company and the duties of each job. You should also include the employees that currently occupy these roles, their pay, and length of time they have been with the company. This allows the new owners to see how much they should raise their salaries in the upcoming year.
When the date is set and it is getting near, you will want to draw up an implementation plan. This will allow the new owner to take over in an effective manner. You will create a schedule that basically shows the bills that need to be paid and the cash that is coming in. This will allow them to maintain control over their cash flow so there aren't big problems that arise when you make the transition. You might also want to make the transition and stay on as a consultant for a month or two after the change to provide clarification and advice to the new owner.