As a business owner, you sacrifice a great deal of time and hard work to bring your business to success. As the business grows, your workload does too. You start in the front driving innovation and sales, then you end up in the shadows working on daily operational tasks, often obligatory, just to keep things afloat. You know you’re needed to keep the business running, but you want to make sure it continues to operate efficiently if you aren’t around.READ MORE >>
When the mention of selling your business comes up, you might feel a little uneasy about starting the discussion. Your business is your baby, and the thought of letting go can be overwhelming. The truth is; however, failing to plan is a plan to fail when it comes to your business exit strategy. You need to have an exit strategy in place for your business. Everyone thinks of their future, but they don’t always take active steps in the present to prepare for what they want tomorrow. There are many reasons why you should discuss when and how to exit your business. Here are eleven reasons to have the exit conversation now:
1) Anything can happen at any time – This is so true. We cannot anticipate what will happen unexpectedly. For this reason, you need to have an emergency exit plan in place. What will you do if you have something happen that requires you to step down from your business quickly?
2) Family obligations are taking more time from the business – Business owners run businesses and have families all the time, but depending on the size of your business and the size of your family, you may need to spend more time away from the business. If you don’t have a team in place that can run the business without you for a few days, exiting might be your best bet.
If obligations, such as an ill family member, or a lot of educational or extracurricular commitments for your children are taking from your time, you could experience a negative shift in the dynamic of your business. A strategic partner can help you free up some time for your family while still allowing you to take an active part in your business’s growth. This type of partnership doesn’t require an immediate exit from your business and allows you to discuss an end-goal for this exit strategy with the partner you join.
3) Personal health issues are pulling you away from the business – When your personal health is in decline, it can be difficult to continue running the business. A business owner doesn’t need the undue stress caused by juggling an illness and the company.
Furthermore, if you find your health declining, or the health of a close loved-one, your priorities might change. Your view on where your time needs to be spent might be more focused on your personal relationships versus constantly working on growing your business.
Again, spending your time away from the business will have a direct negative effect on your revenue and daily operations. This makes the goal of achieving maximum value more challenging. Therefore, having an exit plan is essential.
4) You don’t have anyone in place to take over the business – You’re a great leader, and you run your business like a well-oiled machine. However, what happens when you’re gone? You need to have a plan in place. If you find your children aren’t interested in taking over, or if you don’t have any children, or if you don’t have a manager in place to take over, you need to know what you will do when it’s time to leave your business behind.READ MORE >>
What options are there for you when looking to retire? The three main ones are to sell, pass the company down to family or to shut it down completely.
The latter may seem dramatic and not sound so appealing, especially after years of establishing a business and investing copious amounts of time and money into the venture. Unfortunately, for the baby boomer generation, it is increasingly likely that this could happen if a well thought-out succession plan is not implemented.
There is much speculation as to why there is a succession crisis – here are a few possible scenarios as to why this has happened:
THERE IS NO ONE IN PLACE TO TAKE OVER THE BUSINESS
The generation after baby boomers, Gen X (typically those born between the early 1960s and early 1980s) are not as numerous as their predecessors. The generation after, millennials (typically born between the early 1980s and the millennium) are generally not yet of an age to take over a business.
RAPID CHANGES IN AUTOMATION & TECHNOLOGY
Those Gen Xers and millennials who do want to start a business will not want to take over one they feel is antiquated. A lot of businesses now have an online offering, or machines to automate the process, and this is changing how business is done. As such, the younger generations may not want to go into a business in an industry that will not be around for
You’ve just walked your client outside and thanked them for stopping by, another successful day of work accomplished. You lock the front door of your establishment and your phone rings. It’s your wife. She’s calling to let you know the test results you had been anticipating from the doctor came in. The doctor regrets to inform the family that the results showed your wife does, in fact, have cancer. Your heart stops as her following words become a blur.
Your immediate reaction is “I need to get home now.” You don’t know how to bring her comfort. You feel helpless; there isn’t a cure for cancer. There are treatments, but you don’t even know what her prognosis is yet. A flood of emotions fill you as all your responsibilities come to the surface of your mind. “My wife is sick, and she needs me. My business can’t run itself. My bills won’t pay themselves. The work won’t do itself. What am I going to do?”
We like to think scenarios like this will never befall us; unfortunately, they can, and they do. There are things that can come up in life at any time without warning, and we need to know our options. As a business owner, encountering a turn of life events such as this might give you a new perspective on what’s important to you. You might want to spend more time focusing on your family and less time on the business. You need to know that you have various options to achieve this goal, and each option has its advantages and disadvantages.
Here are some options if you want to take a step back from your business quickly: