Many small businesses seek an outside appraisal before they formally begin the selling process, but supply and demand play a role. Even in a down economy, small business owners can increase their valuation by:

One of the most perplexing problems of success in a small, family-run business lies in passing it on to the next generation.

Open communication and the ability to separate the different expectations of home and work are the keys to a successful father-child business relationship, experts say.

Sometimes the toughest questions in life are the ones that are most important to deal with -- such as succession planning for a family business. Why don't more people plan for their future?

Every parent faces the day when their children are no longer children. They must make their way in the world as adults. In a family-owned business, preparing children for entering into adult life is different in some ways than for other families.

Children of business owners eventually face a dilemma—to join or not to join the family business. The issue deepens when the family business has been around for a few generations and succession now includes different branches of the family. Family battles, disagreements, and enmity can doom a business—and a family—unless succession is well planned in advance.

A lot has already been said and written about succession planning. Its benefits and limitations, its success quotient on the rise of a practical implementation scenario, or the lack of it thereof, from the organizational focus to the employee perspective, have all been covered in depth. Now, let us divert the line of thinking a bit, and look at it from the eyes of one of the other crucial members—the clients. Why do client organizations insist that their vendors put up a formidable succession planning strategy in place? How does it impact them, and what role do they play in charting out a plan, and thereafter during its adoption and execution stages? Any plan implemented by a company must have a long-term vision. It has to be beneficial for all the parties—external and internal, must be flexible, facilitate movement, etc.

Succession planning should not be an afterthought. It is should be as prominent as your regular income tax preparation and should be accomplished over a long period of time. It is important that you think of succession planning not as an “event” but, rather, as a “process.”

A ‘comfort zone’ can be described as a place where we all ‘return to’ on a consistent basis, or a place that provides us with a sense of security because we can predict and control the outcome of many of our actions in that ‘zone’. It is a place in our minds where we find a sense of control and where the world immediately around us has a sense of order. This is a personal place that we design through our thoughts and habits.Business owners live in ‘comfort zones’ because every day that we report to work, we are confronted with challenges that have been created in the building of our businesses. Exiting a business requires that you step out of that comfort zone and develop new patterns of thought geared around your Exit.

When bringing in a new owner or manager, start by giving them a small responsibility and increasing it incrementally. This approach can help give the successor time to grow into the business while gradually increasing the confidence of the departing chief. It will also give employees a chance to become accustomed to the new boss-in-waiting.Unlike when Roy Leppo retired, his son Dick made an abrupt exit when handing off the business to his own son, Dale. While the quick switch made some things easier for Dale, he and the sales manager disagreed over which products to sell. The manager left and so did the other sales employees. 

A tsunami of transactions involving the transfer of wealth to the children of baby boomers is just beginning and will peak over the next 20 years or so. More than 76 million "boomers" have amassed wealth estimated at more than $33 trillion, and millions of transactions will take place to safely transfer that value to the next generation. The defining characteristic of the babyboom generation is independence. Thus, it's no surprise that this demographic group is embracing business ownership on an unprecedented scale, or that the bulk of boomer wealth resides in small or mid-sized businesses.

Tomio Moriguchi, the 69-year-old chairman and CEO of Uwajimaya specialty supermarkets, will soon need someone else to carry on leadership of his company. The son of Japanese immigrants, Moriguchi is from a culture that traditionally emphasizes family ties. But as Moriguchi considers whether his son, nieces, nephews or someone outside of the Moriguchi family will take over Uwajimaya, business comes first. "I do feel desire as a father to pass it on to my son, but most of my assets are tied up with the company," Moriguchi said. "I want the best qualified person."

Retiring baby boomers passing the baton on to their children as well as young families looking to strengthen their connection help fuel the growth of family-owned businesses, according to Mike Gilbert, a business counselor with the Silicon Valley Service Core of Retired Executives. In my experience, families with kids are asking themselves what they want," says Gilbert, who spent 30 years in various senior-level management roles in the valley. "Small business owners with children can balance career and family a lot easier," says Gilbert. "Business ownership allows them to have a personal relationship with each other that goes beyond an occasional family event."

While most entrepreneurs are aware of the need for a will, few consider a succession plan that family members have agreed upon in advance.  Powerful families, wanting to avoid their dirty laundry shaken out in public, may be more likely to accept that they may need help. But the message of long-term planning isn't getting through to most business owners: be they mom and pop organizations or much larger enterprises. Almost 70 per cent of them think they are going to exit their business in the next 10 years and very few have a proper plan.

The best way to prepare for business succession is to imagine both the best and worst that could happen to your company after you're no longer at the helm. Instead of waiting for the "right" moment to develop your succession plan, take a proactive approach and begin planning now so that the investment you've made in your business continues to strengthen and grow.

In business terminology, an ending for a business owner is called an "exit," while the planning of a defined ending is called an "exit strategy." Having an exit strategy tells others who have the occasion to view your business that you're in control of your business, that you're aware and goal focused, and that you have a plan for an organized and profitable ending. Business owners who don't plan for ownership transition are often faced with the inability to receive enough money in an ownership change to fund a comfortable retirement. This doesn't happen because such owners failed to create value in their businesses; rather, it's because they failed to do the planning that would have allowed them to keep that value.

Still, keeping a business in the family isn't all cheers and fast bikes; it can be more like one of those destructive dinner-table discussions we all try to avoid. According to findings by Joseph Astrachan, editor at Family Business Review, more than 30% of all family-owned businesses survive into the second generation while only 12% survive into the third.

According to a 2006 study conducted by Texas A&M-Corpus Christi, 85 percent of family businesses do not make it past the first generation because of lack of succession planning and knowledge transfer. This was not the case with the Garman family.

Tyler Garman's father, uncle and grandfather didn't exactly take it easy on him when they put him to work for the family business.

As a teenager, they put Garman to work on the factory floor at The RoArk Group Inc. in Rogers doing "grunt work" as he called it, cleaning and wrapping equipment that was being sold or just tidying up the warehouse. 

When David Schwartz, owner of Harry W. Schwartz Bookshops, died of cancer in June, not only was he remembered for his talent as an independent bookseller, but also praised for his foresight in preserving the company's legacy.

Three years ago, Schwartz crafted a succession plan that included buying out business partners, transferring business responsibilities to others within the company and training future managers, all the while holding to the company's mission.

As an entrepreneur you've put your blood, sweat and tears into building your business. You've worked 60, 70 or even 80 to 90+ hours per week trying to get new clients and retain them so you can increase your revenues. Sooner or later you'll consider selling your business along with all its worries and responsibilities. You'll fantasize about living the rest of your life in an exotic tropical paradise.

But then you wake up and come back to reality.

Selling your business is not as easy as you thought. You begin to realize that selling a business for a price you deem fair and equitable isn't guaranteed. In fact, the shocking statistic from my research highlights that 75% of businesses that go to the market DO NOT sell.

Why?

Because they either don't receive any offers or they don't receive any offers they consider acceptable.

Leaving a family business to, say, your beloved daughter and not to your less-liked sons? If you don't expect that your sons will sue your daughter, or your estate, when you have passed away, think again.

Business owners spend most of their time and energy on building a business and making it run smoothly. Shrewd business owners also work on what happens to the business after they are gone. This often includes creating a succession plan that transfers ownership in a way that minimizes gift, estate or generation-skipping transfer taxes and making sure that operations are put in competent hands.

As a small business owner, you should be both interested and concerned about two prevailing trends coming together in the American workplace: the job growth created by small businesses and the responsibility of individuals for their own retirement planning.

If you are a business owner, with no employees other than co-owners or spouses, then you may wish to consider establishing a one-person 401(k) plan for your business. That's right. As a small business owner, you can now enjoy the same 401(k) retirement plan benefits currently provided to millions of other Americans.

Time is rapidly catching up with more and more Canadians. As the population ages, it creates greater stresses and challenges for our health care system, pension policy, and labour markets to name a few. A significant level of resources, private and public, have been devoted to better understanding the demographic nature of these topics and how Canada as a nation can continue to provide its work force and retirees with strong, sustainable social programs. However, one aspect of public policy that is in need of furthur study is the impact of an aging small and medium-sized enterprise (SME) sector.

Question: I don’t plan to retire anytime soon but would like to start thinking about a succession plan in case the unexpected should happen. Where do I begin?

Answer: No two succession plans will be exactly alike. Each one will vary depending on the unique circumstances surrounding your business, type of legal entities, whether you have co-owners and your goals and objectives with respect to your family and the business.

Taking this into account, a good succession plan should address the following:

In California, many trust and estate lawyers say that business owners should plan to avoid probate.

Probate is an expensive public process that can cause delays in the estate administration.

To avoid probate, you should meet with an attorney for the drafting of a revocable living trust.

Once you have signed the trust document, most of your property, including your business, will be transferred to the trust. In most cases, you will be the trustee of your trust.