You can sell out now, but maybe you shouldn't

If the past few months have been too much and you absolutely want to chuck the whole business, then Paul Heinze has what could be good news for you.

"If the bank is pounding on your door; if you can't meet your federal withholding payment; if you want to go drive a taxi somewhere in Cleveland - then, yes, you can get out a week from tomorrow," Heinze says.

"Get some good advice from people who know what they're doing, and you can plan a (quick) shutdown."

But a quick, throw-up-your-hands-and-quit shutdown may not be the correct approach, says Heinze, an appraiser and adviser to small and mid-size businesses since selling the family machine company in 1980, and president of Paul M. Heinze Co., Barrington Hills.

"It's better," Heinze suggests, "to avoid decisions predicated on fear" of what's happening now and of what might happen in the near future.

Instead, Heinze recommends planning backward.

"My first piece of advice is to imagine the end, the satisfaction of disposing of your business, and then plan backward - whether it's selling, gifting, merging or liquidating" the business.

Harry McCabe, a financial planner at Harry M. McCabe Advisor, Chicago, takes a similar approach.

"I look at the softer side," McCabe says. Business owners "need a re-engagement plan. What are you going to do on retirement day plus one?

"Even when the time is right; the finances are right; the successor and family members are in line, you need a place to go."

Let's assume that you're not about to be panicked into a sell-the-business decision, but, like many entrepreneurs, the past few months have put the next step thought into your mind.

After you've imagined "the best end result," Heinze says it's time to develop a checklist of possible purchasers - strategic buyers, in his terminology - and have an intermediary test the waters.

On Heinze's list of possible purchasers would be family members; key people in your business, either C-level executives or everybody, through an ESOP; customers; vendors; and competitors.

There are additional considerations, too.

"Ask yourself, 'Is your business divisible into sub parts?'" Heinze says. "The parts may be more valuable than the whole."

You might have a repair function that is salable, for example, or an engineering and design division that can be spun off.

Other options could include selling your customer base to a competitor, selling inventory to a customer, and selling equipment and other assets.

Talk to Heinze and it's clear that he would prefer a planned, orderly sale that is more likely to bring maximum return to the seller. So would McCabe. Especially in family businesses, "You need time to develop the next vision of the business and groom the (next) leadership," he says.

Questions, comments to Jim Kendall, JKendall@121MarketingResources.com.

© 2009 121 Marketing Resources, Inc.