Plan carefully for business continuity

Building a business is hard work. The question of whether to continue, sell or liquidate a business is a very important one. Making the right decision will help ensure that all the effort of creating the business does not go to waste.

There are many variables to consider when contemplating business continuity. Take time to evaluate each of them and put in place the tools necessary for a smooth transition. Start by asking yourself a few questions:

Will your family earn more from keeping the business or from investing any sales proceeds?

Has the business produced consistent earnings? Do you expect continued growth?

Is there a family member who could successfully manage the company?

Could continued ownership of the business be a financial burden in upcoming years?

Is there a buyer interested in purchasing the business?

These are just a few issues to consider as you decide on the course of action to take. SCORE, an organization of retired executives, and the Lanrick Group created the following chart to assist in the decision making process.

Market forces, changing consumer tastes, cash flow problems or some unforeseen problem may bring the realization that selling the business might be the best option. This is a tough decision to make since much energy, planning and dreaming have gone into the creation of the company. Even if a business is troubled, that does not mean it does not have value but selling may be more difficult. Be prepared to share financial records and historical data with a prospective buyer and plan your personal exit strategy in terms of business debts and personal guarantees.

It may be helpful to seek advice from an expert in your industry to ensure that all options have been considered. This advisor can evaluate the worth of the business and may be able to locate potential buyers.

If a family member is going to take the helm of the business, devise a transition plan that allows for sufficient training time. Optimally, the family member will have worked in the business for a few years and be comfortable in all aspects of managing the company efficiently.

Whichever solution you determine is best for the business, start planning now by organizing a clear filing system, keeping all pertinent financial records together and outlining procedures for each part of the business operations. If an emergency occurs that leaves you unable to manage for a short period of time, good records and a procedure book will also ensure that whoever takes over can keep the company on track.

Business continuity is often an overlooked aspect of business management. The safest way to ensure success for the future of the business -- whether you sell or pass it on to a family member -- is to build a strong foundation with solid management and organization.