Many business owners dream of someday passing the torch to a son or daughter or to a trusted employee. In reality, succession planning takes more than a dream – it takes a plan. Carelessly-executed ownership transfers can strain relationships, lead to legal battles, and degrade company value. In some cases, selling a limo business to an outside buyer may provide a better solution. But if you’re set on transferring ownership to a family member or employee, beginning the process well in advance is the best way to ensure a smooth transition.
1. Failure to Identify a Successor
You may hope to one day transfer ownership to one or more children, but is this what your family wants? Adults often have dreams of their own. Many children have no interest in taking over the family company. Others may desire involvement, but might not realistically have the skills to manage a successful chauffeur business. There is also the question of who will finance the transaction. While not as common as in the past, keeping a business in the family is still possible. However, it’s wise to begin asking important questions – both of yourself and your heirs – early in the game.
2. Lack of Transition Planning
Plenty of owners have a loose plan in place for when they retire. But what if you never have a chance to refine the plan before a succession becomes necessary? While not pleasant to think about, illness, death, and divorce are frequent causes for ownership transfers. Having a successor isn’t enough. If that successor isn’t adequately prepared to step in, a temporary leader may need to be recruited from the outside – a process that takes time and money. A newcomer or ill-prepared successor causes an unstable environment, which can lead to productivity disruption and, perhaps, even the need to put the limo business up for sale. The sooner a successor is identified and trained, the better the chances your company will continue to thrive under the next generation.
3. Misunderstanding the Valuation of the Limo Company
A professional business valuation serves as the foundation of any business transfer, whether it’s to an outside party or to your adult child. Every change of ownership comes with a unique set of legal and tax implications. Understanding current value allows the owner and potential successor to devise strategies for the smoothest and most financially advantageous transition, as well as for the future successful operation of the business.
4. Not Seeking Help with a Transfer
By some estimates, 70 percent of business owners regret the way they handled the transfer of their company. Yet every company will eventually need to pass hands in order to continue, whether the successor is an employee, child, or outside investor. Why not do it right? Industry specialists such as limo business brokers and transaction attorneys are familiar with the quirks of the chauffeur business. They know how to determine the value of a limo company, identify strategic opportunities, and facilitate a transfer that is beneficial to both the current and future owner. With guidance from industry specialists, limo business owners can dramatically increase the likelihood that the legacy they leave is a successful one.