Acclaimed author John Warrillow teaches that “Owning a process makes it easier to pitch and puts you in control. Be clear about what you’re selling, and potential customers will be more likely to buy your product”.
Successful processes make successful businesses. The same applies to transitioning. Owning the process of transitioning results in control, assuring that you will exit with peace of mind.
The opposite is also true. Failing to own the process will fill you with fears which may include legacy extinction, underfunded retirement, and relying on others for monthly payments.
The Polestar Process consists of five steps.
Step One – Gathering Information
You will need to identify your starting point and target. What will it take to support your post-retirement lifestyle? What is the value of your personal consumable assets? How much is your business worth and what impacts that value? Most business owners have 85% of their net worth tied up in their business. By understanding the value of your business and your post-retirement financial needs, the gap between what you have and what you need can be addressed.
Step Two – Increase Salability
Business brokers will tell you that not all businesses are salable. The eight drivers that impact the salability of a company also determine where it falls on the scale of value. Even a financially successful company needs to be prepared for sale. Perhaps financial performance has been understated for tax efficiencies or business systems have not been documented. By addressing these drivers, we can increase the salability of a company resulting, not only in a higher sales price but also more favorable deal terms.
Step Three – Explore Options
Internal Sale, External Sale, ESOP, Earn Out, Leadership, Carrying Paper, Employment Contracts…and it goes on and on and on. It will be overwhelming. Because most business owners sell only one business in their lifetime, they don’t know what they don’t know. Relying on the experiences of others and being led through the journey of exploring all options is the only way to ensure you are making the best decisions. This process can take a couple of weeks, or a couple of years, but the result is confidence and peace of mind.
Step Four – Create Plans
Here is where it all starts to come together. The plan is documented, and list of tasks and a timeline are developed. Experienced advisors such as a transition attorney, CPA, financial advisor and a banker are employed. After ensuring that the plan will meet the seller’s personal and financial goals it is time to move onto the final step.
Step Five – Execute Strategy
Completing the items on the task list enables the plan to be completed and the business owner to move into the future with confidence.
There is no need to procrastinate your transition or make regretful decisions due to lack of planning. Owning the process ensures that your objectives will be met and allows you to exit on your terms with peace of mind.