Wyoming Business Tips for Sept. 27

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By Leonard Holler, WSBDC regional director

“What happens to my business when I am gone?” Ralph, Wheatland

It depends: “Are you proactive or reactive when it comes to your business?” You might want to ask yourself this question before it’s too late.

There are two types of people in the world today. Those who think proactively, and those who just react and decide their course of action based on the situation at that time. Proactive people look toward something they want to accomplish ahead of time and plan accordingly.

One of the most important decisions that an entrepreneur will make, as a proactive business owner, is looking toward an exit strategy or succession plan. You need to think about this when beginning your business, because how you plan to exit the business will influence how you set it up and run it.

Do you want to pass the business on to your children, or do you plan to sell to a third party? Businesses that demand a higher price, when being sold, have processes and procedures in place that allow them to operate without the owner’s personal attention. If your plan is to pass the business on to another generation within the family, you need to make sure that they understand how the business operates by getting them involved. This gives you the opportunity to develop their character and business management skills while learning the operations of the business.

One thing is certain: Someday you will exit your business.

Operating a successful business is not a guarantee that you will maximize its value when it is time for you to go. Many business owners are skillful, hardworking, knowledgeable and successful, but may not generate the value that the business deserves because they did not properly plan for their exit.

An exit plan will help maximize the value of your company and will have certain common elements. Most exit plans include:

-- The transition of the business will take one of the following forms -- sale to third party, sale to another owner, transfer to heirs or family members (during the owner’s life or at his or her death) or liquidation at closing. Which option will you take?

-- Determine the value of your business and plan ahead to increase its value. Make sure you get your business off to a good start. Watch for opportunities to grow your business. Also, pay attention to the things that drive value in your business. Measure your performance against those items.

-- Educate yourself about how to maximize your cash flow and minimize your company’s risk. Value is based on cash flow and risk, driving the selling price of the business. Effectively manage your cash flow. With an eye on efficiency and a shorter cash cycle, your business will be healthier. Minimize risk with established processes and policies that reduce risk. Learn how to improve your company’s cash flow and profitability with tools available at www.WyomingEntrepreneur.biz.

Succession planning can be especially complicated in family businesses due to the relationships and emotions.

Wyoming Entrepreneur sponsors a webinar that will help owners understand and manage some of those succession planning issues, and assist with a smooth transition between the owner and the future owners of the company.

Join us online Thursday, Oct. 8, from 2-3 p.m. for information about succession planning from a respected business and estate planning attorney, Marty Oblasser. She will discuss the essential planning needed for a successful transition of a business. Topics will cover the why, how and when of a business succession plan. Oblasser also will share tools and resources that will help business owners’ succession plans succeed.

To register for the webinar, visit the website at www.WyomingEntrepreneur.biz.

A blog version of this article and an opportunity to post comments are available at http://wyen.biz/blog1/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu, or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.