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Never too early to plan

Photo 123RF
Photo 123RF

Having a plan and staying flexible the best ways to plan for a sale or succession

Darren Martin advises his clients to manage their businesses as if they’ll keep them forever, but could sell them tomorrow.

It’s not a phrase he coined, but one that expresses to his clients what their greatest tool to running a great business and in planning for its sale or succession is — to always be prepared and flexible to ensure a successful transition.

Martin says his job as a financial adviser means he wants to help all of his clients to sell their business for the maximum value they’ve created and that the best way to do that is to have a plan for every possible outcome and surprise that could happen on the way to getting there.

“Don’t stumble across the finish line. Break through that ribbon and maximize your business value,” he says.

Where to start with a plan

Martin is the Scotiabank Branch Manager and Financial Advisor in St. John’s at the bank’s Avalon Mall location. Scotiabank is a longstanding supporter of the Newfoundland and Labrador Construction Association.

Martin says his succession planning conversations typically start during customer financial reviews.

When he asks clients about future financial decisions that they or their company are anticipating, Martin says many then indicate they may want to sell their business.

If the client has not yet begun planning for this process, Martin will work with them on crafting a plan that fits their circumstances, goals and business itself. And while each specific plan will be different, Martin says there are certain steps everyone should take in planning their best exit and for their company’s future success.

“It’s about understanding if you want to transition, how you want that to happen … and it’s about thinking about it now,” he says. “The most important element is the planning process which will identify options you personally have available.”

Martin lists five overall steps in succession planning:

  1. Start early: This is the most important part which Martin says will influence your number of transition options and your chosen plan’s success.
  2. Study up: Learn about ownership transition processes by researching or talking to advisors and identify people who will help support you as you plan your strategy.
  3. Map it out: Outline specific action items and make sure these are specific and have an action plan on how to be implemented.
  4. Break it down: List specific objectives for each step of the plan and have clear gages to regularly monitor the plan’s progress.
  5. Be flexible: Be ready when changes happen to adapt your plan as needed to deliver desired outcomes. Focus on the outcome, and adjust to get there.

Getting the most out of a sale

Another plan Martin advises his clients to think about is an ownership transition plan that outlines their personal financial plan, an overall business plan and a practice succession plan — all relating to how you want to live post-sale and how you plan to get there.

Martin also advises his clients to plan for “soft issues,” like what your retirement will look like, how it’ll feel to not work and what to do with more free time, which are things that can also cause stress if left up to chance.

“You have to plan for where you want to go — plan to succeed or prepare to fail. If you don’t have a plan, you’re leaving a chance and are risking not getting what your business is worth,” he says.

In approaching the sale specifically, Martin says maximizing planning efforts and outlining a step-by-step exit strategy helps to ensure a potential buyer will want to pay top dollar and carry the business’ employees and format forward.

He advises his clients to heed the following approach:

1. Plan for surprises

2. Prepare your business

3. Market the practice

4. Identify and mentor a successor

5. The sale: negotiate it, finance it and close it

His role as a Small Business Advisor means his clients may not always follow his advice, but Martin says he always stresses that same bottom line: to plan early, plan well and be flexible.

“Start the transition now, get informed, map your journey and don’t draw a line in the sand. Things are going to change from what you’d expect and like in any business transaction, you must be flexible,” he says.

Darren Martin, Contributed
Darren Martin, Contributed

Darren Martin is the Scotiabank Branch Manager and Financial Advisor at the bank’s Avalon Mall branch in St. John’s. He says succession planning conversations are an essential part of managing a business so that the business’ value is maximized.

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