Finding Success in SUCCESSion Planning

Can you imagine putting a home on the market without getting it ready? Ridiculous. It's real estate 101 to prepare a home to show well, to stage the property and make it tantalizing for prospective buyers.

Yet, when it comes to their own businesses, thousands upon thousands of REALTORS®; and real estate brokers don't do a single thing to prepare for their own "house" - their real estate practice - for sale.

Instead, when the clock finally strikes that final five o'clock, they pack up their computer and on the way out the door bidding everyone a hearty farewell, they hand their Rolodex to the receptionist. They go buy a set of Ping golf clubs and hit the links. Tidy, quick, painless.

And crazy!

Crazy because zipping up a career that way amounts to exactly this: walking away from a more secure future and potentially leaving a very hefty retirement paycheck on the table.

Let me ask you these three questions:

1. Do you want to retire someday?
2. If you do want to retire someday, would you like to have money to live on for that retirement?
3. Do you want to worry less about the future?

Answering yes means you're a prime candidate for a succession plan - a blueprint for a happy life after real estate.

And don't start thinking that this is some huge task that takes months and years to create. It's really pretty simple. And the sooner you start, the better, because you never know when you'll get dealt the death or disability card. Plus, when it's done right, your savings account will thank you - and you'll thank yourself.

The extra $135,000 plan
Here's a real life example of what I'm talking about. One day last year I got a call from a lady named Dawn, a Realtor in Minnesota, who wanted me to help her implement a succession plan. She had been at it for 15 years and was ready for new challenges. Her real estate practice was solid with $300,000 in annual revenues. When I came onto the scene, she already had an interested buyer - her assistant. Dawn's original plan was to simply sell her practice outright to her assistant for a set sum, take the check and walk away.

But we met to look at some options. The more we talked about it, the more we began to see that some of those other options would be more beneficial not only to her, but also to the assistant who wanted to buy her business. And to be honest, we ended up getting more for the business than I thought it was worth.

We implemented a staggered, three-year approach that would gradually give ownership of the business to the assistant by first selling the business for just $25,000 up front - certainly nice for he assistant who didn't have to come up with more cash. Then Dawn would remain with the business part time for one year and earn $120,000. Then for the second year, she'd serve as a consultant and be paid $90,000 and for the third and final year, she'd be paid $25,000, again as a consultant.

So in the end, Dawn walked away with more than double what she had originally wanted. And the assistant got the business she wanted along with professional help to ensure a smooth transition that, in the end, would help the business remain viable.

Starting at the end
So how do you get started? The best place is at the end. Remember the hugely successful book by Stephen R. Covey called "The 7 Habits of Highly Effective People"? Habit number two was "Begin with the end in mind."

That's perfect for succession planning. You start at your retirement date and work back from it to where you are today.

And the first question you ask yourself is this one: At retirement, how much money will I need for those Ping clubs, the green fees and all the other fun stuff you want to do?

Here's a key point: now, today, is when you begin to create a business that's worth that number. You begin to prepare your "house" for that big sale.

To entice a buyer (and get the kind of money you deserve for your business) you need to have real numbers to show buyers just what your business can do for them. That means you need to have clean records with specifics. You must be able to show buyers that your database, your contacts, your former and prospective clients and that you and your reputation are good and real, and exactly how much money your business is bringing in and can bring in.

You must show buyers that you've stayed in touch with your sphere of influence, that you've treated customers fairly, that your contact management program is effective and that your database is full with the right names and therefore full of potential.

In other words, much of succession planning is getting your business in tip-top shape with systems today, so that it runs smoothly and that it will continue to run smoothly and efficiently when a buyer takes over tomorrow.

Partnering up to say goodbye
One lesson from my example with Dawn that I think is vital is that she knew whom she was selling the business to. So in essence, they worked together to build the succession plan. It was like a joint venture. And that's an ideal situation to strive for.

Why? Because it allows you to work with the buyer after the sale not only to ensure your income, but also to help the buyer be successful. You both have a vested interest in the business working properly and being profitable, especially if you go with a staggered approach. A strong transition helps prevent key elements from falling into the cracks.

Simply handing over the reigns to the first Joe Schmo who walks along doesn't add any stability to your retirement fund. But working with the buyer does.

I recommend creating a worksheet that spells out the mission statement, the vision, the philosophy and goals of the plan and of your business. This helps the buyer feel secure and it helps you determine how you can leave the business - with cash, residuals or both, as Dawn did.

And bit of advice, don't go it alone. Enlist the help of a consultant, a CPA and a lawyer. Make them your board of directors in charge of succession.

I challenge you to start now. Pick that retirement date and start working back from it. Decide how much you need to retire. Take a close look at your business as it is today. Evaluate it, get feedback from pros on how you can make it better by adding value to it so that when that retirement day shows up on your calendar, you'll be ready to make the next phase of your as enjoyable as real estate was.

I wish you only the best!

About The Author-- Bob Corcoran is a nationally recognized speaker who is the founder of Corcoran Consulting, an international consulting & coaching company that specializes in performance coaching, and the implementation of sound business systems.http://www.CorcoranCoaching.com 800-957-8353 Info@CorcoranCoaching.com

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