Owners who make the smoothest transitions tend to start looking forward well before the transition date. Four simple questions help:
- What am I looking forward to?
- What can I enjoy today?
- What part of the next phase can I practice now?
- How well did I live today?
They apply whether the next phase is a sale, a succession plan, retirement or simply stepping back.
What am I looking forward to?
Many owners can describe in detail what they want to get away from, and very little about what they want to move toward. A transition goes better when there is something on the other side: time with family, travel, a hobby, a board seat, a new venture. Naming it also makes the financial planning concrete, because it shows what the next phase will cost.
What can I enjoy today?
The next phase is not only a future date. Owners who wait until the sale closes to start enjoying life often end up working years longer than they planned.
What part of the next phase can I practice now?
This is the most practical question on the list. Practicing the next phase means trying out pieces of it while the business is still running:
- Working a four-day week for a quarter and seeing what changes.
- Handing one area, such as purchasing, hiring or a key customer relationship, to someone else.
- Living on the expected post-transition income for a few months, to test the budget.
- Stepping out of the monthly close and reading the financial package as an owner, not a bookkeeper.
Each trial reveals something about the business and about the owner’s readiness, and each one makes the eventual transition smoother.
How well did I live today?
This one has no spreadsheet. It is a reminder that the point of all the planning is a good life, today as well as later.
The financial side of looking forward
Practicing the next phase works best with a few financial basics in place:
- Clean, timely monthly financials that a buyer, lender or successor can rely on.
- A realistic view of what the business is worth and what drives that value.
- A written plan for income, taxes and timing, reviewed on a schedule (see Trust the Plan).
- A business that runs without the owner in every decision (see Your Business Should Work for You).
The bottom line
The whole series comes down to five reminders: Protect the bridge. Trust the plan. Take care of your health. Enjoy the time. Stop trying to earn your life.
For owners starting to think about their own next phase, planning the financial side early makes every other part easier.
The Next Phase: a five-part series
- 1. Your Business Should Work for You
- 2. Trust the Plan
- 3. Protect the Real Assets
- 4. You Don’t Have to Earn a Day Off
- 5. Practice the Next Phase Now (you are here)
Planning your next phase?
Succession, sale and exit preparation, cash planning and clean monthly financials for agriculture, food and beverage, hospitality, real estate and retail businesses in California, Texas and Hawaiʻi. Start with a 30-minute call.
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