Five Steps To A Successful Transition Part 2: Know Your Numbers

In part 1 of this 5 Step Series, we highlighted the importance of Planning Ahead and the benefits of Choosing a Quarterback to help you, the business owner, manage the transition process.  In this edition, let’s take a look at the importance of Knowing Your Numbers.  Let’s start with some industry specified statistics to set the stage:

  1. It is estimated that over 95% of privately held business owners do not know with confidence what their business is actually worth
  2. Less than 10% of business owners have a written succession plan
  3. More than 10 Million businesses will be sold or liquidated in the next 10 years with the proceeds earmarked to fund retirement
  4. 75% or more of the “Baby Boomers” are not confident they have saved enough to fund their retirement
  5. 80% of business owners are uncertain if the sale of their business will be sufficient to provide for their goals and needs in retirement.
  6. 90+% of business owners largest asset is their business itself. It is almost always the business owners most valuable asset.

Now I don’t know about you, but as a business owner myself I cannot imagine adding to the stress of my day to day activities the uncertainty of not knowing if I can retire and if I am going to be able to sell or transition my business.  Being able to remove the uncertainty and stress is not complicated. All you need is a business valuation and a personal financial plan.  The most common objections we hear are that business valuations are expensive, and complicated, and time consuming.  Depending upon the purpose of the valuation, that can be entirely correct.

Yet, for the purposes of strategic planning and business optimization, it does not have to be any of those things.  We specialize in simplifying the valuation process and deriving a true, accurate value of what the business is worth today at a very fair price.  Furthermore, we look at what the potential value of the business would be if over the next few years some of its strengths were enhanced and its weaknesses improved.  Along the way, the business owner can see the improvements and the business value increasing as steps are taken toward optimization.

“Knowing Your Numbers” as far as what the business is worth today, and what it can be worth at it’s full potential is powerful information.  Yet having an accurate business valuation in hand only solves half of the equation.  The real value to that number comes from applying that information to “Knowing Your Numbers” on the personal financial planning side.  It is critical that we define what your financial needs will be in retirement so we can determine with confidence whether the value of the business in combination with all the other assets in your overall portfolio are sufficient to meet and exceed your goals and dreams in retirement.

This is where Optimized Business Transitions really shines.  In partnership with SC Financial Services, we provide business valuation, operational assessment and optimization, transition planning, and personal financial planning.  Through the combination of these services, we help our business owner clients “Know Their Numbers” on the business and personal side and provide confidence that whatever the owners transition plan looks like, he or she can execute on the plan with peace of mind.

In our next segment, we will look beyond the numbers at Assembling the “A” team.  Who, When, and Why it is important and what is the impact to the bottom-line.  Thanks for reviewing this and by all means let me know if there is anything in particular you would like to discuss by going to and selecting the Contact Us tab.

Succession Planning: It’s Time To Make A Plan

Ever feel like you’re constantly putting out fires? Do you wish you could get back to a place where running your business was fun again?

Wish no more! OBT can show you how to get there. Let’s start with a no-cost assessment that delivers fast, high-level insights into your company’s current operational health and value. The assessment is called Discover; and that’s what it does for you…you’ll ‘discover’ the major opportunities within your business.