You’ve worked hard to build your business into what it is today. You’ve created a reputable name for yourself and are a trusted company within your community. Now, after years of dedication and investment into your small business, you’re ready to retire and turn those dockside daydreams into your day to day reality but what will happen to your business? Whether you’re ready to retire or just starting to plan for your future, you need a well thought out exit strategy.
What is an exit strategy?
An exit strategy is your strategic plan to “exit” your business and transition into retirement. It’s useful to have an exit strategy in order to get your equity out of your business and it’s associated assets so you can enjoy a retirement that isn’t restricted financially. This strategy can come in a few different forms and will be dependant on your goals. To get you started here are a few options you’ll want to think about as you devise your plan.
1.Choosing a family successor
Passing your business to a family member is a great way to keep your business alive, especially if your family member is already working in your company. Additionally, it allows you to continue working in some capacity and at your discretion. For many small business owners, it’s a wonderful dream to be able to pass on the family business to your children & be able to provide financial stability to their own families. However, children or family may elect not to work in the same industry or have no interest in owning or operating your company.
2.Selling your business to an existing employee
Perhaps your family doesn’t want ownership of your business, but you’d like to see your company continue to thrive. Why not consider an existing member of your team? You may have the perfect candidate to take the reins, already trained & ready to carry on your business. This may also allow you the opportunity to continue in an advisory role should you choose while your transition into retirement.
3.Selling your business to another business
You’ve invested time and energy into your business and as a result, your business has gained the attention of a few competitors. Why not take advantage of your position and sell to another business in your industry? This strategy can be a win-win for both you and your buyer. It allows you to quickly sell your business for a profit and the acquisition gives your buyer the means to grow their business while eliminating competition in the industry.
4. Long term liquidation
This is a great strategy for business owners to consider early on in their business, allowing you plenty of time to execute your plan. Having a long-term liquidation strategy gives you time to slowly & strategically extract profits out of your business while working on a smooth transition into either the sale of your business OR closing it down entirely.
5.Complete liquidation
If you’re looking to close your business so you can get right to retirement, you may consider complete liquidation. Selling your assets can help you get your investment out of your business quickly, although it may not be as profitable as selling your entire business.
Any business owner at any stage of their business should be thinking about the next steps to take to protect their financial future. Retirement planning should be no different, which is why having a solid exit plan in place is so important. With a retirement expert and experienced financial advisor at your side, you can use our Blue Wealth program to build your retirement plan, so you can retire within the next 10 years. Knowing how to transition from business ownership to retirement early on will make the process much easier and will help you get the largest profit out of your business.
If you’ve thought about retirement even in the most basic concept, give Darryl Smith a call at 705-434-0562. Starting early is the first step in creating a strong exit strategy you can depend on when the time comes to retire from your business. We take the time to assess your best course of action for whatever stage your business or retirement plan is at, and help you make profitable decisions.