“You wouldn’t jump out of a plane without a parachute,
so why would you exit your business without a plan?”
Selling your business in Australia is no different to selling your business elsewhere. As a business owner you may refer to this stage of your life as simply selling your business. In our industry, we term it exit planning. But without a plan, you are essentially leaping out of a plane without a parachute.
There is no single formula that will result in a happy retirement for business owners. according to PriceWaterhouseCoopers study entitled “Whose Business is it Anyway”, over 75% of business owners say they regretted selling their companies a year after the sale. But “there are ways to improve the chances to exiting your business successfully and enjoying a rewarding retirement”, says Richard Jackim, attorney and founder of the Exit Planning Institute.
“Most retirees end up unhappy because they are unable to adapt to the new retirement model”, says Ken Dychtwald, psychologist and author of the best selling book “Age Wave”. He continues, stating that “People tend to look at their lives as being linear and retirement as being the final stage… If you realize that you’re not locked in to any one approach or model – and that life is really a series of cycles in which you reinvent yourself every 5-10 years, you’ll be much better prepared. A retirement of 20 or 30 years gives you a lot of time to test out new roles for yourself – and if you do you’ve boosted the odds that you’ll succeed at retirement.”
As you begin to think about exiting your business, here are some be common mistakes to avoid:
1. Exiting Before You’re Ready.
Exiting from your business early may seem like a status symbol, signaling your financial success. But that doesn’t mean it’s the right thing to do. Make sure you have considered all of the business, personal, financial, estate and tax issues. You might consider consulting with a Certified Exit Planning Advisor (CEPA) who is trained to help you wrestle with these issues.
2. Locking Yourself In.
For many boomers, retirement is the first time in their adult lives to be their own bosses – that is, if they choose to. While planning what you want to accomplish in retirement can be exciting it can also be scary. The choices can seem overwhelming. While you should have some sort of retirement-life plan, it doesn’t have to be carved in stone. Consider breaking up your retirement plans into small, bite-size pieces. Think of your retirement in 2-year blocks and plan 2 years out.
3. Failing to Communicate Your Dreams to Loved Ones.
Spending decades of your working life with a spouse or significant other doesn’t necessarily mean you’ve shared all your thoughts and dreams about retirement. You might consider sitting down with your spouse to write down list of retirement goals – separately. When you compare them, you might find that the two lists look very different. Then the challenge is to find middle ground that leaves both feeling they will have a retirement they can look forward to.
4. Leaping Before You Look.
The retirement dreams and reality often clash. Peter Christman, the CEO of the Christman Group points out that “What you enjoy during a 10-day vacation isn’t necessarily what you’ll want from 20 years of a retirement”. The same rules apply to retirement careers. Whether you plan to start a business or move to Italy, it’s a good idea to test-drive your plans before you begin. Work in a similar business for a few months before making the leap. Or spend a few months in Rome before you buy that villa.
5. Overestimating Value.
You’ve built up a nest egg, but a significant percentage of it is probably tied up in the value of your business. Make sure you understand the value of your business before you do any financial planning. A survey by a national business valuation firm found that over 50% of business owners overestimated the value of their companies. A great financial plan based on an incorrect assumption can do a great deal of harm. Have your business valued by an experienced valuation professional, and then discount the results in your financial planning models. It’s important to be conservative when you’re planning the financial security of you future.
6. Don’t Count on Consulting.
When it comes to pondering a post-retirement career, the field of consulting is a perennial favorite. But how many newly minted consultants does the market really need? If you’re expecting a consulting business to help pay the bills in retirement, test the waters before you dive in.
7. Overdoing It.
Many boomers may want to avoid the unfulfilling years of leisure lived by their parents in retirement. But it’s possible to veer too far in the other direction as well. Make sure your life is balanced and addresses your all of your physical, spiritual and mental needs at the same time.
If any of these points resonate with you or you simply wish to explore your options, then get in touch with your local Business Companion office by calling 1300 85 64 77 and one of our highly skilled team will happily talk to you about your options. Otherwise, you may wish to take one of three FREE short questionnaires to give you a score that will show you just how ready you are to take the leap of faith.
WRITTEN BY ERIC PURVIS