Are you thinking of selling your company? If so, you may want to ask yourself these important questions: How will I get top dollar for my company? Will I sell to a trusted employee or to an outside party? What will I do with my newfound freedom? It is best to know the answers to these questions before agreeing to walk away from your life's work.

As a seller, you want to get the largest possible sum of money for your company. The best way to accomplish this is by improving your gross margins and decreasing your operating expenses. To increase sales and profits, you may want to bring in someone new that you could possibly groom for the top spot. You could pay that person a modest salary but reward them with cash or equity in the company based on the amount of business they bring in above and beyond the firm's current revenue. You can also reward that person for ideas that affect profitability.

To decrease operating expenses, reassess your employee benefits program. For instance, consider changing to a 401(k)-style retirement plan from a traditional pension plan if one is in place. You can also hire a consultant to help streamline your business and production processes. Give employees bonuses for identifying ways to do business more safely and cost effectively.

For your company to survive the sale, make a plan to replace yourself. Create a solid management team before leaving. It may take years to develop, but this team should know every function of the business: management, sales, financials, operations, production and product development. Your business should be able to function without you.

It is best to have a strategic exit plan three to five years before you leave the business. The most crucial resource in your business is you. If you want to see your company remain successful, be prepared to remain on the management team for one to three years after the sale.

Once your company is sold, what will you do with your free time? Are you going to start a new business? Will you stay involved in your current business? Will you retire with hobbies? You must be mentally ready to leave before deciding to sell the business. Work is a passion for some business owners and once that passion is gone, there may be a void. While retirement can be quite fulfilling, some owners may feel as though they no longer have a purpose in life. If you need a reason to get out of bed every morning, you may want to reconsider selling your company at this time, but you should have some sort of succession plan in place.

Deciding to sell your company may be a painful process. It's like letting go of a child that you raised successfully. Although you want to continue helping it flourish, you realize that you have your own life to live. Preparing yourself both mentally and financially may lead to an easier decision.

Ron Friedman is a Stonefield Josephson Principal and business consultant. For more information on how to get the best value for your business, contact Ron Friedman at Stonefield Josephson at 310-432-7414 or rfriedman@sjaccounting.com.

 
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