Lincoln, Neb. —For business owners, transitioning out of a business can be complicated. A lot of boxes must be checked before letting go of the keys. To help individuals navigate the red tape, the Nebraska Cooperative Development Center at the University of Nebraska–Lincoln has created the “Business Transition Models” booklet, a step-by-step guide that walks business owners from ideation to closing the doors.
“Every business goes through a transition, whether they close, whether they sell,” said Jason Tuller, the Rural Prosperity Nebraska Extension educator who compiled the information for the booklet. “This goes through all the different options.”
Funded by a Ewing Marion Kauffman Foundation grant to research grocery stores and transitions, the booklet breaks down various options for transition, including through liquidation, private sales or family/employee transfer. Flow charts provide visual representations of the steps so individuals can track their progress along the transition path as well as see expected time frames and pros/cons for each option.
“This booklet gives people an idea of how long it takes,” said Tuller. “If somebody waits until they’re 65, and they say, ‘Hey, I’m going to retire by the end of the year,’ they don’t have time to do these types of transitions that may be the best value for everybody involved.”
According to the booklet, a successful transition can take up to five years. So if a business owner is thinking of leaving, the planning needs to begin now, said Tuller.
“In a lot of our small towns, there’s a lot of stores with stuff still on the shelf. They’ve just closed, and people never go back,” he said. “This booklet gives [the owners] options.”
For Tuller, the community-side of business transition is why he compiled the booklet. In addition to transitioning a business to closing or a change of ownership, it also covers moving from a traditional business model to non-profit or a cooperative model, where members of the community own the business together.
Cooperatives are not new to Nebraska. Currently there are 10 co-op stores in the Cornhusker State, along with the Ukhikon-a (Helping One Another) cooperative program on the Omaha reservation, and plans for real estate investment cooperatives and homecare cooperatives.
Tuller said the purpose of the booklet is not to persuade business owners toward one type of transition or another, but to provide them with the information that will help them make the best decisions, financially and personally, for themselves, for possible future owners, and for their communities.
“Businesses have value to small communities,” he said. “Hopefully we can save some businesses in our small communities by giving them a way to transfer, so that they continue to operate.”
The “Business Transition Models” booklet is available to download at https://go.unl.edu/c5uh.