Hardware Retailing

OCT 2018

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: http://www.hardwareretailingarchive.com/i/1030469

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Page 68 of 102

HARDWARE RETAILING | October 2018 64 M any independent home improvement businesses are passed down through generations, but you should have a plan no matter who is taking over. Hardware Retailing developed this list based on elements from a U.S. Small Business Administration course that addresses selling and succession planning for small businesses. For more information, visit sba.gov. To learn more about succession planning, visit TheRedT.com/succession-timeline. Ways to Prep for Your Succession Plan 1. Consider your options. There may be more people who are interested in taking over your business than you think. If someone shows potential, talk to them about their career goals and their future with your business. It's better to have too many options than to be stuck without any if your family members choose a different path. 2. Meet with your financial and legal advisers. Be sure to let your attorneys, accountants and other business advisers know when you're starting your succession plan. Not only is it good practice to keep them in the loop on large business decisions, but they can also help you manage the legal and financial adventures that come along with selling a business. 4. Know your tax responsibilities. Check with your financial adviser, CPA or tax attorney about what you are responsible for when you exit your business and what your successor should expect in that regard. According to the SBA, there are several types of taxes that impact closely held family businesses. Ask your adviser about income taxes, gift taxes, the generation-skipping tax and the estate tax. 3. Perform a valuation. The SBA defines a business's valuation as its combination of assets (cash, receivables, inventory, equipment and real estate) and its revenue stream (net profit over time). While some of these values are steady, other values fluctuate. Be sure you have an accurate representation of your business to present to potential successors. 5. Reach out to your wholesaler. If you've done your research to sell your business and you think you're out of options, think again. Your wholesaler is eager to help your business continue. Talk to your sales representative about your desire to exit your business. They can help you develop your exit strategy and potentially find another business owner who is looking for a new growth opportunity. 6. Evaluate your business relationships. Consider your myriad business relationships as you start developing your succession plan. Maybe there are vendors you're working with that don't fit anymore, or perhaps it's time to reconsider your financial institution. While it's probable that these relationships will change with a new owner, if you're already in the thick of it, you should consider how they are working for you right now.

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