This is my favorite season — football season. I generally avoid making too many predictions. But I think it is safe to say this year that the Jets are in trouble. They failed to plan in time for this season and are now stuck with a bleak outlook. I apologize to any and all Jets fans, but this year I recommend tempering expectations.
Like the Jets, many farmers fail to put a game plan into place for the eventual transfer or sale of their business. This lack of preparation results in unrealistic expectations and often the end of the farm or farm-related business, making business succession something that is dreaded rather than celebrated (much like the Jets’ upcoming season).
Transitioning your farm or preparing your farming business for sale requires teamwork, time, research, planning, strategy, preparation, networking and commitment. It is not done overnight. If you are thinking about selling your business, whether now or in retirement, start the process now and follow the eight winning plays below. Remember, failing to plan and follow a solid game plan doesn’t just lead to one loss. You lose the season and perhaps even your dynasty.
1. Do not do it yourself. You need a team to help you sell your business. The Jets’ Josh McCown can’t do it alone, and neither can you. Trying to do it yourself leads to costly mistakes that result in increased time and less money in your pocket. Include your tax adviser, financial adviser and estate and business planning attorney.
2. Understand why you are selling your business. Think this through and have a clear understanding. Why we take certain actions plays a big role in how we approach certain transactions. If you cannot truly articulate why you are selling your business, then it may not be the right time. Remember, there’s more to making a good deal than getting a good price.
3. Do some spring cleaning. Get your business in order. One great way to do this is to review a buyer’s due diligence checklist and go through your business from a fresh perspective. This often includes updating your business’ legal documents and reviewing operating procedures.
4. Know what you are selling and how valuable it is. You need to have a realistic expectation and understanding of what you are offering for sale and how valuable that is to prospective buyers. Starting the season thinking the Jets are going to win the Super Bowl will not lead to satisfying results for you (or the Jets). Put together an asset sheet and start valuing your business.
5. Step into the buyer’s cleats. Why would they want to buy your business? This requires knowledge of your industry and other competition. What is your competitive advantage? What sets you apart for other businesses in your area? Understand how your business will be valued and appraised, and take proactive steps to increase that value.
6. Understand your end game. You do not want to sell an asset list. You want to sell a business opportunity. If you want to play in the Super Bowl, you can’t just put the league’s best 11 players on your team; you may end up with four quarterbacks. You need to look at the whole package to have a winning season. Generate some excitement and buzz, but be positive, realistic and honest. Unrealistic projections and overstatements will backfire. The Jets may win one game, but they are not going to the Super Bowl.
7. Plan for success. Do not get stuck on one buyer. Plan on pursuing multiple buyers and reviewing multiple offers. Arrange meetings with your most interested buyers and bring them on-site. Get them more excited to buy your business, but do not offer anyone exclusive options yet. You determine who is interested first and then evaluate the right fit for you and your business.
8. Keep an open mind. The market will value your business, not you. Do not get attached to a “price tag” without first putting your business on the market. This seems crazy, right? It is like Kirk Cousins starting the season (again) without a contract ... oh, wait.
Developing a winning game plan that drives your business to the peak of success and leads to a favorable sale price takes time and work. Don’t expect to do it overnight. At the end of the day, you know your industry and your business better than anyone else. Move forward with the winning plays above, and you will take the first steps in playing in the Super Bowl (just not with the Jets).
Harris is the head of the Estate Planning & Probate Practice Group and the Business and Corporate Law Practice Group at Swier Law Firm, Sioux Falls, S.D. Contact her at 605-275-5669 or at Lindsay@SwierLaw.com. Go to swierlaw.com.