Business is a strange thing, and running your own might start off with a set of specific goals in mind that change to something else as time goes on. In fact, being adaptable and being able to change your goals as you need to is a very important part of being a successful business owner, and if you’re too rigid, you might not get where you want to go at all.
So it’s clear that, sometimes, change has to happen in business, and being ready for that change and knowing what to do and why those changes have to happen is a good idea. It means you won’t be so disrupted, and you’ll be able to move forward rather than getting stuck in one place, which definitely means your competition is going to get ahead of you.
One change that might be needed is a change of ownership in your business. Although it’s probably not something you’ll consider at the start, and it might not even cross your mind that it could be a benefit, the fact is that changing ownership in your business can work out well. Let’s take a look at some of the reasons to change ownership in your business and what you might need to do to make it happen.
Changing For Growth
You’ll want your business to grow, which might mean entering new markets, but if you’re not current on what those markets are like, then it could be a big mistake. Market research is definitely going to be important, but it could be easier to bring in a partner who really does know that market first-hand, and who can get to work right away. In the end, it will save you time and money, and, as long as you trust that new partner, you can focus on your original business and leave the new expansion in their capable hands.
But it’s not just about expanding into new territories; sometimes, just expanding your business at home can benefit from a fresh set of eyes or some new skills and expertise, depending on what you want to do and how you want to grow (if you want to add new services to your business, for example, then bringing a new partner on board could be the best idea).
You won’t always need to change ownership when you expand your business, but it can be a good thing to do if you want to put some legal measures in place and ensure that everything is safe and above board, then making your new colleague a partner and part-owner could be a safe choice.
Changing For Succession Planning
You’re not going to want to run your business forever – one of the reasons many people start a business is to ensure they’re able to set themselves up for a good retirement, for example – but what’s going to happen when you feel it’s time to retire? Will you close the business down altogether? Although that might seem like the only option you’ve got, it’s quite an extreme path to take because once the business is closed, you won’t make any money from it anymore, and if you want a comfortable retirement, it’s actually going to be better to keep the business running and take a consultant’s salary or dividends, for example.
So what other choice is there?
The other choice is to pass the business to someone else, and that can mean a change of ownership. You can pass the business to a family member, for example, or you can find a current employee, such as one of your managers, who you feel would be a great fit to take over from you when you retire. You might even advertise the position if there’s no one who you think would be able to or want to take on the role. The point is, if you want someone else to run the business, and you want that person to become the legal owner so you don’t have to worry about the business in your will, for example, then you’ll need to change ownership officially. If you don’t, there could be problems down the line that you just don’t want to have to deal with.
Changing For Financial Restructuring
Not all business ideas work out, and not all risks – even if they’re calculated – get you the results you’re looking for, and if that’s the case, you might need to make some big changes in your business to help when it comes to finances – it’s known as financial restructuring, and it can be ideal if you need to find some extra money or pay off some debts, for example.
Changing ownership could be a good thing to do if you find yourself in this situation because you’ll be able to reduce your debt, make things run more smoothly, and possibly unlock some more value in the business. True, you wouldn’t be the sole owner anymore (and possibly not the owner at all, depending on what you wanted to do and how much money you needed to have injected into the business), but if it keeps things running and helps to boost your finances, then it could be worth considering.
This could also be the ideal time to rid yourself of anything that isn’t bringing any benefit to the business. If you’ve got a property, for example, that’s causing more drama and headaches than it is helping you, you can reduce your liability by ensuring it becomes the new owner’s asset to do what they want with – you may need to use quitclaim deeds to make that happen, but if it leaves you with a clean slate and you can move forward, it’s certainly something to look into.
Changing To Minimize Risk
We’ve mentioned risk above, and it’s certainly something that can cause problems in business, even if it’s something that’s absolutely necessary if you want to grow. Of course, you’ll need to do all you can to minimize the risks you’re taking, and perhaps to spread out the risk in whatever way you can – one of those ways is to change ownership in your business.
If you’re the only one taking on any risk (and possibly the only one with any insight into what risks to take), that’s a heavy burden to bear, and it’s not a sensible thing to do. Getting other opinions and insights is the best option, and although you don’t have to bring in a new owner (you can ask your customers or employees for feedback and ideas, for example), changing ownership structures in this case does have its positives and benefits.
One of the biggest benefits is that you’ll share the risk in a legal way – you’ll both (or all, depending on how many owners you have) have your own liabilities and you won’t have to rely just on yourself anymore. Not only does that mean the risk is much lower for you as an individual, but it means there’s more chance of success for the business if there are lots of different ideas coming forward and being introduced.
Final Thoughts
Changing ownership in your business can mean all kinds of different things, from selling the business entirely to just stepping back so you can get a better work-life balance, and everything in between.
This should never be a snap decision and it’s always worth taking time to consider your options, and to get legal advice if you need it, but if it’s something that’s going to work for you, there’s no reason not to take the first steps towards finding out more.
