Selling a business is a big decision that shouldn’t be taken for granted. Once the sale is made, you must go through a phase known as the transition period (or the handover period). During this period, you, as the existing owner, will remain with the business for a specific timeframe to help the new owner take control of it.
It’s crucial to carefully plan and think through the transition early to ensure that you properly execute it when the time comes. When done well, an effective transition period offers you and the buyer reassurance and comfort that the performance of the business will not fail. Here are other benefits of structuring the transition period:
Increases the Value of the Practice
The new owner needs complete assurance of the value of the business practice they’re buying into. Along these lines, a smooth business transition period can help reduce the disruption to business operations.
If you rush the after-sale transition period, there’s likely to be a negative effect on the performance of the business. You also won’t have time to train or inform the new owner and give them some reassurance as they take on the ownership title.
Learn from Previous Owner to Avoid Mistakes and Costs
It’s no secret that business owners make mistakes from time to time. However, their ability to learn from their mistakes and use that knowledge to achieve specific goals is what a successful business needs.
An effective business transition period allows the new owner to be acquainted with some of the previous owner’s mistakes. The information can help them develop a new and foolproof business plan to avoid these mistakes.
The staff needs reassurance that they will continue working for the business. When introducing them to the new buyer, inform them that their job requirements won’t change.
The employees are likely to be productive if you communicate the changes in your previous business. You should also help the new owner learn how the existing payroll works to ensure that the staff gets paid and remains motivated.
Helps Continue Customer Relationships
The after-sale transition period aims at continuing customer relationships to avoid losses. You need to assure the existing clients or customers that the new owner will offer them the same product or service at the same standards.
Communicate with your existing customers early in the business transition and introduce them to the new owner. This strategy will help keep them satisfied and improve customer retention rates.
Maintain Existing Relationships with Vendors and Suppliers
Without your involvement in the after-sale transition period, it will be quite difficult for the new owner to get used to the existing vendors or suppliers. Handing over the list of these third-party providers to the new owner won’t be enough. You need to contact each one of them and notify them about the new ownership.
Remember to take the buyer through the vendors’ or suppliers’ billing methods and policies to ensure that they make payments on time. Late or inconsistent payments to vendors or suppliers may ruin the company’s reputation and put it at risk of losing essential supplies. It may also take quite some time for the buyer to find new third-party providers if they ruin their relationship with the existing ones.
You should be present at the company for a short while to guide the new owner on the types of supplies or essentials the business needs to run optimally. Be sure to give them access to any portals used to order the items for a smooth business transition.
Working with the new owner in the transition period can be fun and exciting. You get to train the owner as required and slowly decrease your involvement in the business to allow them to adjust over time. Once the transition period is complete, the new owner can run the company independently.
At Private Practice Transitions, we will walk you through the process of completing a successful business transition so that the new owner, your team, and the business you’ve worked hard building, remains running successfully.