Happy New Year! Here we are in 2020 and life is still going great for some, not so great for others, and yet we are here trying as hard as we can to make sense of the life God gave us.
If you are a small business owner, whether you are just starting or have been around for a while, you know the best way to make sense of your hard work and dedication to your business is to prepare it for a transition to a new owner. However, if you have not been preparing for it, in 2020 it will be a great opportunity for you to stop and think about it. In addition, we have some data that were very recently published that will help you make that decision comfortably.
Recent survey results of over two hundred small business owners published by The Wilmington Trust, uncovered important reasons why small business owners must have a viable transition plan. This survey shows small business owners where they stand with their peers.
Key Survey Takeaways
The four key takeaways from this survey are that:
58% of business owners have no specific plan despite the fact that long term transition planning usually results in higher business values, lower taxes, and more peace of mind for all stakeholders.
47% of business owners over the age of 65 do not have a specific transition plan, even though starting the transition planning process early in the life of the business has been shown to lead to better outcomes.
78% of business owners who do not have a plan say the main reason is that they enjoy running their company. But they may not realize that with proper planning they can continue to run their business, yet also maximize value and reduce taxation.
67% of business owners believe that they have a very good idea of their company's worth, but two-thirds of them also want to talk to an expert about valuation. This highlights the need for outside specialists like the Washington Valuation Group (WVG) who can accurately measure and help improve a company's worth.
Business Owners 5 Transition Goals
According to the survey, most small business owners' goals are to:
Ensure the company remains viable in the long run.
Take care of their employees.
Ensure customers are taken care of.
Financial security for self and family
Ensure the company retains values.
Business owners often rely on their tax professionals, lawyers, and accountants as the three most important advisors. They may be underestimating the importance of other experts.
Business Valuation Experts
Regardless of what goals a business owner has, the bottom line is that the worth of the company is what matters. Therefore, a business valuation is absolutely critical to making sure the owner does not leave any money on the table. A plan to maximize value must be in place hence the need for a business valuation expert.
According to the survey, 67% of business owners say they have a very good sense of their company's worth yet the same percentage wants to speak to a business valuation expert. Among those who claim to have a very good sense of their company's worth, 65% are still interested in confirming it.
Here at the Washington Valuation Group, maximizing the value of your company is our concern and we've helped many business owners determine and improve the value of their companies so they don't leave any money on the table when the moment comes.
Listen to some of them here.
Achille Ekeu is the President and CEO of The Washinton Valuation Group (WVG). He is a Certified Valuation Analyst (CVA) and board member the National Association of Certified Valuators and Analysts (NACVA). He is an Author, Speaker, and Consultant on business valuation issues across the US and beyond.