Do you know how you are going to exit your business? You may have dreams of going public, selling to the highest bidder, or retiring and handing over your business legacy to your family...
Big dreams aside, the truth is that many small business owners have no exit strategy for their businesses in the event of disability, retirement, or death. Given the current economy, it isn’t surprising that small business owners focus their energies on business survival, future growth, and even remaining active in the business after retirement.
However, a business exit strategy not only means having a plan for the unexpected – including financial hardship, injury, disability, and even death – it also means having a plan for the succession or transfer of ownership of your business when it comes time to hang up your hat and retire.
There are a few things to consider as you plan your business exit strategy:
Develop a Succession Plan
There is no “one plan fits all” when it comes to developing a succession plan for your business. It is a critical decision that has a direct impact on long-term business profitability. While succession planning is a challenging task, it is worth the reward of watching your business grow and succeed in the next generation.
Invest in a Retirement Plan and Insure Your Worth
You will want to invest in a retirement plan, life insurance, and even personal disability insurance – all of which will protect you and your family when it’s time, forcibly or not, to step away from your business. It’s relatively easy to address retirement planning because we all hope to get there, and more importantly, we want to enjoy it. However, you must remember that life and disability insurance are equally important for the protection of you and your family, should the worst happen.
Process of Exiting Your Business
Whether you are selling your business, transferring ownership, seeking retirement or facing a “forced exit,” such as bankruptcy or liquidation, planning your exit is a big undertaking that has implications on employees, your business structure, its assets, and your tax obligation.