PCA Magazine 2022 Show Issue

PREMIUMCIGARS.ORG VOLUME 2 2022 | PCA The Magazine 39 Business or professional reasons— • Job offer fromanother company • Purchase offer for your business or your business assets •Dissatisfactionwith sales and profits •Changes in themarket or industry Personal reasons— •Retirement • Burnout with self-employment •Health concerns or family needs •Desire to go in a newdirection The complexity of developing a succession planwill involve questions about your particular business’s profitability—andwhether you own your own building—andwhether you have a likely buyer candidate in mind, such as a son or daughter or key employee.We repeat: Unless you get super-lucky, you’re going to need professional guidance in order tomake themost intelligent exit when the time comes for you to hang up your spurs. We talked toTonyKhoury, a business broker inGreenville, NorthCarolina, about some of the considerations and pitfalls facing any entrepreneur who is thinking about getting out. He says the three things he looks for in evaluating whether to take on any business case are 1) that the seller ismotivated and ready, 2) that three years of clean, defensible books showprofitability, and 3) that there is an appropriate asking price. All of these factors entail journeys of their own. During research for this article, one real estate broker told us that, in his experience, if a business owner does not own the building, then he doesn’t really havemuch of anything to sell. “What’s left?” he asked. “Adatabase of customers? You can buy amailing list for two grand. All you’re really left with after that is what’s sitting on the shelf.”Moreover, he added, “Even if the business has operated profitably for 30 years in the same leased location, what is the guarantee that the landlordwill IT IS A TOPIC thatmany of us would rather not think about, but the stubborn fact remains that nothing lasts forever. This includes businesses, and business owners. The late journalist and social critic ChristopherHitchens said, as he was dying: “It will happen to all of us that at some point you’ll be tapped on the shoulder and told, not just that the party is over, but slightlyworse: The party’s going on, but you have to leave.” Of course, it is not only a business owner’s death that can extinguish a money-making enterprise. Perhaps the time has simply come for you to enjoy awell-earned retirement.Will you be able to pass that business on to fresh newhands…or will you simply lock the door andwalk away? Both eventualities do happen, all the time. Chances are you’d like to extract full value for the business and see it continue after you’ve left the scene. The topic of succession planning ismuch larger than any brief journal article can adequately address. The mechanical process of putting a plan together will require input fromyour CPA and, probably, an estate-planning attorney. The goal here is simply to give you some ideas to think about before the need becomes dire. To ensure an orderly transition to newownership you need a thoughtfully worked-out succession plan. Any successful business needs a succession plan, just as any responsible person needs life insurance. TheU.S. Small Business Administration (SBA) defines succession planning as “creating a plan for someone to either own or run your business after you retire, become disabled, or die. In simple terms, succession planning is the process of passing control of the business to others.” Consider themany reasons (besides a death) that a businessmight need to transition to newownership. The SBA lists these eight: B Y W I L L I A M C . N E L S O N