In our experience, most clients haven’t prepared or considered developing a long-term goal to sell their company. Often, most owners are caught up in the week-to-week management of their company. Then, their age or burden of management prompts them to seek retirement. As an owner, it is in your best interest to have a plan in place. The plan should include ways to develop your company so it becomes sellable or ready for transition to someone else. Unfortunately, we have encountered sales that are out of chaotic necessity and not orderly preparation. At Propane Resources, we have encountered several common issues that we believe you should be considering in your five-year plan.

Have you thought about your company’s organizational type, S-Corp, C-Corp, other? Most business owners relied on their CPA to check a box when they created their organization and haven’t thought about it since. When the time comes to sell your propane company, this small detail concerning your company’s organizational type can sometimes make the difference between hundreds of thousands of dollars in taxes. This is important because changing from a C-Corp to an S-Corp takes five years! In general, selling your business as an S-Corp can reduce the owner’s tax liability rather than leaving it as a C-corp. If your five- to ten-year business plan involves selling your company, consult your CPA and attorney to get the ball rolling.

Maybe your five-year business plan doesn’t involve selling your company. Your sons and daughters are involved in the business and taking on more and more leadership and management responsibilities each year. Passing down your family’s company to the next generation is a great idea! Don’t be afraid to have those awkward and sometimes difficult conversations of succession planning. Who takes over the company if something happens to you? Proactively discuss passing ownership down to the next generation. Nobody wants to wait too long and see the next generation family members leave the company to pursue other careers. Ask them about their future plans concerning the business before you’re ready to sell or retire. This will leave plenty of time training and mentoring the interested parties. Plus, having a little skin in the game will help drive growth and prosperity for your company in both the short- and long-term.

Whether your plan involves selling, or passing ownership down to the next generation, it’s critical to know what you have. Make it a point to “Clean up” your business every so often. This can mean anything from purging old equipment, tanks, and vehicles; updating corporate records and county land surveys; removing old liens on vehicles and real estate; and making sure important documents are on file. Maintaining a clean back office and corporate records can streamline whatever plans you have for your business down the road.

Have a plan! Be aware of changing market conditions and how these factors can disrupt or accelerate your five-year plan. Be proactive in creating and maintaining a company that somebody would want to purchase or inherit. Taking some of these little steps throughout your five-year plan can pay dividends later.