It's never too early to start planning for the transition or sale of your business — no matter how far down the road that may be. A good succession plan can help identify potential buyers, position your business for future success, and set you up for a strong financial return once you sell.

Here are 7 things you can do now to maximize the value of your business in the future:

1. Know what you can get from your business

It's a good idea to get expert advice on how much your business is worth today. Once you have these numbers, you can work with a team to put together a plan that builds the value of your business over the coming years. Starting the planning process early is critical as creating the long-term value in your business can take years. 

Keep in mind, your company's value will be driven by a number of factors, so it's smart to make sure your plan accounts for different scenarios. For example, the value of your company may be affected by:

  • Who you sell it to — whether it's family, employees, management, or a third party
  • How you sell it — for instance as an asset sale or share sale
  • When you sell it — market trends, business performance and personal considerations all play a role

2. Have a strong management team in place

A business that can provide a seamless transition at the time of sale is of greater value to a potential purchaser. Ensuring management has clearly defined roles, is supported by a strong team and has a focused vision is key. By identifying potential successors early on and implementing a training strategy, you’ll equip them with the skills they'll need to keep business thriving.

3. Have a tax strategy

Various strategies such as income-splitting and incorporating your business, as well as personal tax savings vehicles such as RRSPs, Tax-Free Savings Accounts, and Individual Pension Plans may help you reduce your tax burden both now and down the road. Take the time today to understand what is needed to qualify for the Lifetime Capital Gains Exemption to make sure your business is ready when it’s time to sell.

4. Limit liabilities and red tape

Liabilities come in all shapes and sizes — from legal and financial to employee liabilities. Make sure you tie up any loose ends before beginning the sale process to clear the way for a quick sale. Also, keeping your corporate records up-to-date can help avoid any additional costs and delays.

5. Put in a strong financial performance

Showing above average profit margins for your industry — and a strong balance sheet — is critical to building your company’s value. While this isn’t always easy to do, particularly in challenging economic times, the right solutions and advice can help your company generate a strong financial performance and maximize the value of your business.

6. Keep growing

A company that has demonstrated steady growth and has a strategy for continued growth may be more valuable to a prospective buyer than one that is simply stable. Knowing where your growth is coming from (i.e. organic vs. acquisition) and having a plan in place to achieve that growth can help make your business more attractive.

7. Offer financing, if possible

If you can provide purchase financing to a prospective buyer, it may improve your chances of selling your business efficiently and for maximum value. You’ll need to determine the financing structure that works best for both buyer and seller, and how it will affect the future success of the business and your income upon exit.