Tip #198: 4 Things to Consider Before Succession Planning

Successful business acquisitions for both parties are often the result of strategic planning and preparations made many years before the business goes up for sale. Financial advisers will recommend the planning process starts at least two to five years prior to listing the business for sale, with the intent to make your business appealing to potential acquirers.

In this excerpt from Building and Selling a Successful Business, an education session lead by Andy Charles and Erin Collins of Haven’s Candies during RCI’s 2015 Fall Regional Conference, Charles outlined the following four areas to evaluate when molding a successful business in preparation for acquisition.

• FinancesThe financial picture of a business being groomed for future succession will look much different than a business that is operating to sustain itself and grow. It is important to position your business in a way that you are able to offer the best possible financial picture to future potential buyers. 

• Staffing
  A self-sustaining operation is more appealing to potential buyers. Begin training and nurturing your staff to operate the business, whether you are there or not – which, by the way, allows you to take a vacation now and then too.
  
  
• Facilities & Equipment
  A business that has been in operation for any length of time is likely to have less than ideal facilities or outdated equipment, which may have been tolerated through the years because the business was focused on other areas. This doesn’t mean you should build a new manufacturing facility or replace all of your equipment, but consider how these elements of the business will appear to an outsider. Then evaluate what is worth the investment to update and what’s not.
  
  
• Customers and suppliers
  When preparing your business for an acquisition, assess what opportunities and risks exist? What impact does a transition in ownership, both negative or positive, have on those relationships and how will you manage that?
  

Time and preparation offers the opportunity to position your business in a way that allows for the highest return, as well as the ability to focus on what’s important to you. For Charles, it was crucial to find a successor who would be a good steward of the business, take care of the employees and customers and play an active role in the community. Thanks to the due diligence performed years before the acquisition, Charles was able to find the right fit for his business and complete a successful transition between himself and Collins as the owner-operator of Haven’s Candies.

RCI members: Click here to login and view the complete presentation from Charles on topic of succession planning, as well as Collins’ take on the acquisition and transition process on our website.

Not a member? Click here to learn how RCI can help you build your sweet business. Stay connected with RCI through Facebook for more tips and inspiration dedicated to the retail candy maker.