“Exit planning is good business planning,” stated Josh Huseman, a vice president at FNBO Bank who specializes in business owner advisory services. This statement emphasizes the importance of having a plan in place when transitioning out of a business.
To explore successful business transitions in Longmont, the Longmont Chamber of Commerce and FNBO Bank collaborated. Two examples were examined: Longmont Florist and Martini’s Bistro.
Longmont Florist is a family-run business that has been passed down through three generations. Nate Golter, who had helped in the floral shop during his youth, pursued a different career in engineering and education. However, he felt drawn back to the family business and approached his parents about transitioning into a leadership position. The process was not rushed, as Golter spent three years gaining managerial experience before negotiating the transfer. Due to the added challenges of the pandemic, the transition took an additional two years. Ultimately, outside professionals such as accountants and lawyers were brought in to ensure a smooth process. Golter hopes that one of his children will take over the business in the future, but understands the importance of allowing them to pursue their own passions.
Sarah Morgan, the owner of Martini’s Bistro, had worked in the restaurant industry for many years before deciding to purchase the restaurant when the previous owners retired. Her journey through the transition process took a little over a year. During negotiations, she learned that the perceived value of a business may differ from the owner’s expectations. Morgan advises relying on the assessed value provided by banks as a helpful tool. She also stresses the importance of not becoming emotionally invested until the deal is finalized, as business sales can be complicated. Morgan has already started planning for her own succession, with her 8-year-old daughter expressing interest in taking over the restaurant. However, Morgan wants her daughter to have other options and is currently working on finding a replacement for her role as general manager.
Huseman highlights three key factors to consider when building a business succession plan: the timeline for creating the plan, building transferable value, and the factors that contribute to the overall price. Developing a succession plan may take time and requires careful consideration of how the owner wants it to be structured. Huseman suggests starting with one decision and having a conversation about it, such as discussing the possibility of an employee taking over. Transferable value is crucial for attracting potential buyers, so owners should work towards reducing their own dependence on the business. Early assessment of the business’s value allows the owner to determine if it will be enough to support their retirement or post-sale plans. Addressing any gaps in value early on can help the owner make necessary adjustments.