If you work with an Exit Planner, they will tell you there are four ways to leave your business. Often, during this conversation your planner will lead you to the conclusion that all four are open and the decision is up to you.
Although this might be technically true, I’ve found that there often really is one, or at the most two exits that business owners can have. Considering more than this doesn’t make a lot of sense to me.
I’ve had many business owners tell me that they would like to transfer the ownership of their business to their managers. If the business is saleable to a third party, the transfer to managers almost never happens. At the end of the day, the business owner will choose cash over their managers.
If the business is one like a construction company, the owner might want to do an external sale to a third party. Unfortunately, construction companies are not very saleable (like not at all) and if the business is to be transferred, it will be to managers or children.
If your business is a small retail business, there unfortunately is likely to be no buyer. Your manager doesn’t have the ability or interest in running or buying the business. Your children are not likely to want to enter the family business. This leaves as your only option a liquidation strategy.
Instead of looking at what different exit strategies might be, it’s often better to look at what your likely strategy is going to be. Preparing your business for a likely strategy makes more sense than the time and energy that goes into looking the entire waterfront.
Finding what your likely exit strategy is most important when you’re actually planning to get out of your business or you’re working with a financial planner to see what it takes for financial independence.
My belief is many baby boomer business owners are going to work much longer than normal retirement age. For some this will be because they enjoy what they do and for others it’s because it’s the best financial option.
Since many owners are going to have to work past normal retirement age anyway, they might just as well continue enjoying the benefits of being a business owner.
What are your thoughts? If you have thoughts about this, please contact me at Jpatrick@stage2planning.com.
We have put together a complementary coaching process called The Exit Planning Assessment. This process provides a coaching call on eighteen key areas a buyer would look at in your business. You will have a call with no charge as well as a report that outlines a projected value of your business, the gap you could fill and strong and weak parts of your business. Click on the button below to start the Exit Planning Assessment process.