October is National Women's Small Business Month, and you don't have to look far to see why it deserves attention. The dental practice that opened a second location. The salon that has been on the same corner for twenty years. The bookkeeping firm that started at a kitchen table. The bakery that started with mom's recipes in the home kitchen.
So first, a thank-you. Many of the businesses that hold our communities together were built by women who took the risk, made payroll in the lean years, and kept showing up. This month is a good reason to say so out loud.
And then a practical thought, because it's the one I hear least often.
The checklist is the same for everyone
Someday, every one of those businesses will change hands. It might be a sale, a merger, a handoff to a key employee, or a transition to the next generation. When that day comes, a buyer will look at the business, not the person who built it, and ask the same questions they ask every owner:
- Do the books show what the business actually earns?
- Would it run for a month without the owner in the building?
- Are the best customers loyal to the business, or to one person?
- Is there a team, a lease, and a set of processes that will still be there after closing?
Those questions don't change based on who's answering them. The preparation is the same work for every owner.
What isn't the same is what comes after. Every owner's picture of the life after a sale is their own, and it should be. That's why I think about this work in three phases.
Phase 1: The years before
It starts at the end. Before we talk about the business, we talk about the life it needs to fund: what you want the years after the sale to look like, what should be left after taxes, and what you'd like to pass on or give away. That number becomes the target.
Then the work: clean financials, a business that can run without you, a structure that makes sense for taxes, and a clear understanding of what a buyer will see. Most of this takes three to five years, and very little of it can be fixed in the ninety days before a closing.
Phase 2: The transaction
This is the shortest phase, and it's led by your business broker and your attorney. When Phase 1 has been done well, you come to the table knowing what the business is worth to you, which makes it much easier to judge what someone is offering.
Phase 3: Everything after
The check clears. Now the proceeds need to become income, the estate plan needs to reflect what you have now, and the giving you've thought about for years can finally take shape. There's also the question owners rarely ask out loud: who am I on the Monday after? For a long time you've been the person everyone calls. That doesn't end cleanly just because a transaction did.
One question for this week
If you own a business, whoever you are and wherever you are, here's a question to sit with:
If a buyer called this year, could your business run for a month without you?
If the honest answer is "not yet," that isn't a failure. It just tells you where Phase 1 begins.
To every woman who has built something worth handing on: thank you. When you're ready to think about what comes next, I'd be glad to have that conversation.
— Mark
Mark H. Johnson, CFP®, CEPA®, is the founder of Reviresco Financial Planning & Wealth Management in Monroe, Michigan, and works with business owners in person and by video. Schedule a conversation →
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Reviresco Financial Planning and LPL Financial do not provide business valuations, legal services, or tax advice.