We invest so much time and effort into our small businesses that it’s difficult to perceive an end to the whole process. Ultimately, however, there will be an end to your involvement in your small business whether it be for retirement, sale of the business, your own death, or simply the shutting down of the business. It is a good idea to have an exit strategy planned out ahead of time to protect the interests of you and your family.
It is important to have a succession plan in place for your company, just like you plan your estate and write your Last Will and Testament to instruct how your personal assets will be handled after your death. Since there are many factors to consider with the change of ownership of a company, you will need to have a legal team available to assist with the legalities.
Communicate with the Future Owners
There is always the option of transferring your company to a family member or a long-term management partner. This option can provide you peace of mind knowing that your legacy will be cared for and nurtured after you depart the company. It is important to discuss your intentions with the future owners and make them aware for their own life plans. Part of your succession plan will be to ensure you have the right people to run your business when you step aside.
Selling the Company
Selling your company to an outside buyer and walking away completely is certainly a viable option for your exit strategy. It is important to have the company properly valuated and to set realistic expectations for the value of your company. Oftentimes a company’s value can surprise the owner either positively or negatively. Although selling the company to someone who has not been involved in the process with you may be difficult, it will also be a fair sale free from emotional attachment, which could mean more money for you.
If you have the luxury of planning your exit strategy, it’s important to do so as far as two years in advance. Barring any unforeseen accidents, this should be a task for which it is straightforward to plan ahead. The longer you give yourself to plan your exit strategy, the more certainty you can feel in your decisions. If retirement or a business sale is on the horizon for you, be sure to start thinking of your exit strategy so you can plan to do what is best for the company you have worked so hard to build up.
The more organized you are the easier it will be to execute your exit strategy and enter the next chapter of your life, whatever that may be. If you need assistance with planning an exit strategy, your financial advisor from The Beacon Group of Assante Financial Management Ltd. can help guide you.