Exit strategies are far too often overlooked or delayed among business owners. Statistically speaking, the average business owner has at least 90% of their wealth tied up in the business, yet more than 70% of owners don’t have a planned exit strategy or succession plan. While this isn’t beneficial for the current owner who may suddenly require liquidity through need or personal desire, consider the fallout of poor planning: organizational failure, employees at risk of job loss, vendors and customers abandoned—a missed exit strategy is a failure in leadership.
Counting On Heirs To Run The Business
An all-too-common expectation is after a founder has passed, his/her heirs will carry on with the family business, continuing the growth and expansion you set forth. The reality of this legacy-mindset is while 88% of owners believe their business will stay in the family, only 35% survive to the second generation, 12% to the 3rd, and less than 4% of businesses will continue on to the 4th generation. While these statistics may be alarming, a well-developed succession plan may be the difference between the 65% and 35% of 2nd generation businesses.
When To Sell My Business
We’ve discussed ways to sell your business numerous times, so we won’t cover the nuts and bolts of selling, but rather the “when” question. Setting a universal age or career timeline is simply not practical nor helpful for the masses, but what is universal is creating a framework or mindset of planning for owners to consider the next phase of their lives and the business. Planning your exit strategy does not mean you are ready to sell in 1 year or a decade, but accomplishes 2 goals:
- You can list the business for sale and close a transaction at a fair market price, transferring the equity you have in the business to your personal wealth for future investments, expenses, or pleasure, and
- provide clear steps to ensure survivability and longevity of the business in the absence of your leadership
Planning your exit strategy often involves more than you, a pen and paper, or even your corporate attorney. Select and retain a business broker or business advisor to learn about your business and help structure a leadership succession plan and growth strategy to maximize your return on a future business sale. To learn more about our Business Advisory and Seller Services, contact us to schedule a complimentary confidential consultation.