The Trust Company of Tennessee Senior Vice President Sheryl Linck talked with Automotive Recycling Magazine about key considerations for a transition plan that lets you move to your next chapter on your own terms.
An excerpt from the article, All in the Family:
Sheryl Linck, senior vice president at the Trust Company of Tennessee, offers family businesses investment management, business advisory services, and financial planning, agrees that, though not everyone has this luxury, the best time for business owners to start transition planning is when they start the business.
The Trust Company of Tennessee
“The most successful plans occur over the course of many years and are an integral part of the business strategy. If this has not been the case and a business owner is contemplating a transition, they should plan on a three- to five-year timeline,” Linck says. “Of course, you can transition out of your business in a matter of months, but preparing an ownership transition on your own terms takes time. Planning not only establishes security for your loved ones, but also creates a legacy impact for the business you built.”
Linck points out that a key step is understanding your goals with succession planning. To whom do you intend to transition the business, such as family, key employees or a third party? If it is an internal transfer, are the employees ready and capable of assuming ownership? Also, what is your transition timeline?
It’s also important to make a realistic evaluation of where the business is now and where it needs to be for a successful transition. As Roland explains, this involves thinking about what is important to you and your life.
“So many business owners have a business that is essentially a job for themselves where they have freedom to work that job as they wish. The potential problem with this is that when that owner stops working, the business may come to a halt and income stops flowing,” Roland says. “An alternative to that scenario is to picture your business as a machine that you want to run itself with no assistance from you, then you have true freedom in your life and have built a valuable asset. The closer you can get to having a self-running business ‘machine,’ the more successful you will be. Of course, you can always work in the business if you want to; the point being that the goal is that you do not have to work in the business to have it be profitable and continue to grow.”