Preparing to sell your business is a process that takes careful planning over months, if not years. In addition to tightening up operations, addressing structural or management issues, and making sure your books are well-organized and cleaned up, you’ll also need a financial strategy for your after-sale profits.

Your financial advisor will play an important role in determining your exit strategy. Financial professionals advise you to have a well-defined plan for wealth management, charitable giving, and
asset allocation that aligns with your specific wealth objectives, risk tolerance, and future plans.

The key to a comfortable retirement is knowing how much money you’ll need to sustain your lifestyle. That’s why we recommend consulting with an experienced business broker 2-3 years before your planned exit date. If there’s a gap between the value of your business and how much you’ll need to make from the sale, a broker can help you address the gap and increase the value of your company.

Many owners run a significant amount of expenses through the company, which will convert to personal expenses after the sale; cellphones and technology, insurance benefits, personal vehicles, gas, and travel expenses are all good examples of things that should be factored into your estimate of monthly expenses. Accountants say it’s not uncommon for a business owner to discover that day-to-day expenses that will need to be supported post-sale are at least 50 percent more than they initially expected.

Mitigation of your capital gains tax burden after the sale is a priority for most owners. Some defer taxes by choosing an earnout strategy or seller financing option, spreading profits overovert over a few years. Some owners seek new investment or entrepreneurial opportunities.

Charitable giving is one way to reduce a seller’s tax burden over the first year or two after the sale. It’s also a way to put the “surplus” capital, what remains after your lifetime capital needs are adequately covered, to good use for good works.

You may already support a cause that holds meaning for you or your family, like supporting cancer research, or the local arts, or nature conservation. Your financial advisor can help you develop a plan for annual giving that reduces your income tax and adds to your legacy in the community.

You might also consider supporting an organization that is dedicated to building the talent pipeline for the HVAC industry. I’ve recently discovered Explore The Trades, a non-profit organization dedicated to teaching young students, their parents, and teachers about opportunities in the skilled trades. Founded in 2005, Explore The Trades is committed to bridging the technical talent gap in the plumbing, heating, cooling, and electrical service trades.

If your after-sale plan includes volunteering in the community, you can explore helping teachers and parents learn about careers in the skilled trades at recruiting events, career days, or at sites and mentoring programs dedicated to helping young people prepare for successful careers and productive lives. Many owners worry about losing their identity as a business leader and sense of purpose after they leave their company. You might consider starting a scholarship fund or internship program, both of which give back to the industry and put your leadership and financial skills to good use.

Of course, when the time is right, you’ll think about positioning yourself and your company for a sale. Just remember to think about after your HVAC life too.