Recently I had an opportunity to work with a company in desperate need of Chief Financial Services (CFO Services). Their only shareholder passed away suddenly. There was no Board of Directors in place, no operating agreement, and no other Officers in place. Of course, this is a worse case scenario and puts both the families of the owner and employees in serious jeopardy.
Below are a few successful strategies I recommend for small businesses that want to maximize the value of their firm:
- Have a buy sell/operations agreement that spells out what happens in case of death, disability, and divorce. Be smart and fund it with insurance as early as possible; then cash is available when you need it most.
- Establish an advisory board comprised of internal and external parties. Two parties can create a highly successful board. Have areas of entrepreneurship, business development, operations, and financial management expertise included in your trusted advisors. An independent board minimize risks, provides independence, and helps to establish sound financial and operational practices that will increase your shareholder wealth. Determine early how you plan to create your exit strategy.
- A decade in advance you need to keep succession in your annual strategic planning focus. Five years to your exit should include above average profitability, growth in sales, and performed a solid review process of yourYour senior leadership team should already be in effective roles when you depart. This will attract your best buyers and highest price.
- Manage your business wisely and plan accordingly to provide the best opportunities for your employees and your loved ones.
Please call for a free consultation on succession planning strategies, corporate governance, strategic planning or financial management. I guarantee you will find value in our initial meeting.