By Koos Kruger, CEO and author of Business Companion
Many business owners dream of the day they can close up shop, and walk away with a sizeable lump sum in exchange for their business. According to the Australian Institute of Business Brokers only 21% of businesses listed today for sale concludes the sales process.
A very large number of ex-business owners are being left with no or a significantly less of a nest egg than they have been counting on for retirement. It?s not all doom and gloom, however. For a number of exiting business owners, it may simply be a matter of identifying the right exit option for their circumstances and doing some work to improve the attractiveness of their business, also called Exit Planning.
In simple terms, Exit Planning is a comprehensive roadmap to successfully exit a privately held business and prepare the owner for life after work. It asks and answers all the business, personal, family, financial, legal, and tax questions involved in exiting a privately owned business. It includes contingencies for illness, burnout, divorce, and even an owner’s death.
However, it is the willingness of business owners to plan for the Exit Event that is often the issue. Within their business life, it makes sense that they’re more concerned about what’s happening today instead of what will happen when they want to sell. But tomorrow often comes more quickly than many business owners might expect.
The more you can plan for the future, the more you can focus on the present day, allowing you to build the success your organization deserves, and that you and your family deserve.
Formulating a precise exit plan for your businesses won’t minimize the chance of unexpected bumps in the road. Those bumps will come no matter what you do. However, having a structured exit plan can help you better navigate your businesses in the present, thereby maximizing the chance that you can view the future with more peace of mind. With more peace of mind and more concentration on your present business, you are better able to deal with the inevitable obstacles and challenges that emerge as you get closer to the day you want to close up shop.
Transition and Exit Planning is for every person that owns a business, either as a sole trader or as a partner, within a large or small business, to get you to think about what your business sale will look like and to take action now on how you are going to get there.
Tomorrow might be too late, as many retired business owners will confess.