Key Advisory Resources

First, compile a list of your key business advisors, both internal and external, and inform them that you intend to start the journey of transitioning out of your business. This list will include your accountant, banker, lawyer, management consultants and trusted personal advisers. This will allow informed advisors to play a role in formulating and executing the plan moving forward.

Personal Financial Review

Since most business owners have increased their personal net worth as the company has grown, meeting with a personal financial advisor and accountant is needed. Areas to focus on include: developing a personal financial statement (assets, liabilities, income, taxes, etc.), creating a snapshot of investment portfolio performance and asset diversity; a comprehensive insurance review; a review of the company’s shareholders; determining family needs and preferences; and an assessment of the capacity and interest of future generations in assuming ownership.

Services of an experienced tax lawyer and/or accountant may be necessary to fully scope out and comprehend all legal and fiduciary issues.

Business Diagnostic Scan

Before deciding which business transition strategy is best for you, undertake a scan of your business , including the external environment and the industry conditions. The Business Diagnostic Framework graphic presented below (developed for our book Business Diagnostics), is a systematic approach to diagnose the current health of your business. This is a critical piece of business planning that is often overlooked or under appreciated.

The Business Diagnostic process evolves from the outside concentric circles, assessing first the external environment (described as a PEST-C analysis) and then drilling down into the key internal functional areas of the business operations: human resources; operations; marketing; technology; and, finance. It is critical to conduct an external scan that considers all the factors that could impact your business before evaluating internal conditions and developing a strategic transition plan.

Initiate a Change Readiness Review

Once all other reviews are complete, the final component is understanding and assessing the appetite for significant change and transformation within the organization. To evaluate this, you again need to look externally and internally.

The external focus is on the market place requirements, business imperatives and organizational initiatives. Questions to consider include, What impact will the transition have on customers? What needs to be done to meet customer needs? Does ownership have a enduring relationship with clients which may be affected after the transition? and, What other organizational challenges may take place post transition?

Internally, it is important to denote cultural requirements are needed and what changes must be made to support a new design, strategy and operations as a result of the business transition. As well, new leaders and existing employees may have to behave differently to adapt as the organization works to re-cast culture and design success for the future.

Mike Thompson is a Fellow, Certified Management Consultants (FCMC), Associate Faculty at Royal Roads University and co-author of Business Diagnostics, a business book providing a simple methodology to size up a business. Check out Mike’s lesson on Assessing Corporate Health in Elevate, Zada’s online course for business owners.

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