Leaving your business behind is a difficult decision, as you’ve probably gone through a lot to make it successful. If you’ve decided that it’s time to let it go, however, then you have to prepare for those who are planning to take over.
According to Berkshire Hathaway CEO, Warren Buffett, “If business schools could offer just one course, it would not be on stock trading, […] but critically important, discipline of business valuation.” Retirement isn’t the only reason for leaving. In fact, you should also prepare for unforeseen circumstances like injury or even death.
This ensures that your business can go on without you. It protects the operations financially, while giving way to leave it slowly. This process is important, especially if everyone is highly dependent on you. Through succession planning, you’re giving the business a chance to grow. It’ll become more flexible to challenges and will probably have a higher survival rate.
Scolari Comerford, an accounting firm in Sydney, stated that many business owners often lack the understanding as to what their business is really worth. Business valuation can determine the economic value of your business by reviewing its financial statements, cash flow models, and comparing it to companies that are in the same industry.
The Right Time to Leave
Leaving your business shouldn’t happen too soon, though. The transition is challenging, especially if you don’t have someone who can replace your position immediately. Depending on the condition of your business, creating a succession plan and a business valuation with a licensed accountant can take at least three months to five years. In case of emergency, you can shorten this time span, but it might not do much for your business.
Letting go of your business has a significant effect on its operations, so make sure that you’re leaving it in good condition. This way, it’ll continue to grow even without your guidance.