October 2021 Economic Development Update:
When I started a marketing agency years ago with two partners, the first thing our lawyer asked: What’s your exit strategy? We laughed because we hadn’t even opened our business yet but were being asked how it would end. But it’s no laughing matter. Too many business owners don’t have an exit strategy, so when it comes time to retire, whether planned or forced, they aren’t able to reap the financial benefits they’ve worked so hard to build. And all too often, the business folds, negatively impacting the employees, customers, suppliers and the community as a whole.
There’s no time like the present to think about your exit strategy – how you’d like to transition out of your business to enjoy the next stage of your life. There are a few ways this can happen.
Family Transition: Transitioning a business to a family member is an obvious choice for those business owners with children interested in taking over the family business. Having those conversations years before you plan to retire will be critical to a seamless transition for both you and your family member(s).
Employee Transition: Working with a current employee or recruiting an employee with the intent to implement a transition buy-out plan is a great way to plan your exit strategy. It gives you time to train and transition the work as well as ensure your customers get to know the new owner. It also gives you the opportunity to retire gradually if you’d prefer to move to part-time hours before retiring completely. You may consider investigating mentoring or internship options through your local Chamber of Commerce as a way to begin searching for the next owner of your business.
Selling Outright: If you are planning to outright sell your business, positioning your business is critical. If you have a bricks-and-mortar retail or service business, ensuring the physical assets are in good repair will be important. Strong financials and a solid accounting system are critical to be able to valuate your business. An active and positive online presence is an added bonus so the new owners have a channel to promote the business to the existing customer base.
Having a solid exit strategy ensures you realize the value of the business you’ve built when you’re ready to move on to the next phase of your life. If you’d like to discuss your small business exit strategy, I’m available to chat about options.