Business Owners Need a Planned Exit Strategy
It may sound easy, a planned exit strategy for the business owner. Your first day in business should be your first day to begin setting up an exit strategy. Yes, I know that seems premature but think about it anyway.
Too many business owners have NO clue, even after 20 years, 40 years as a business owner how to exit their business. Obviously, if you have ONE truck with your name on the side after 40 years, it’s not going to take much time when you’re ready to “throw in the towel” or simply quit.
However, we’re talking about building a big business with employees, land, buildings, a fleet of trucks, landscape equipment, tools, etc.
Maybe you have family members working in your business and they’re already stockholders or you plan to “will” them the business when the time comes for you to retire in the future.
Not long ago, one of our church friends worked past 90 years old which was awesome. Another friend is 86 years young today, was in the hospital last week, still running his business everyday. Not a problem, UNLESS… Is there a problem with this picture? ONLY if there’s NO PLAN in place to pass on the ownership and exit the business.
Sometimes, business owners believe they’re invincible, going to live forever and their Preacher says so every Sunday. However, the business owner is sleeping through the sermon because he/she is NOT going to live HERE forever.
Same goes for about 70% of the population who either refuse or never get around to having a WILL drawn up on plans for their STUFF (money, houses, cars, piano, boats, land, stock, etc). NOT a smart idea if you have anything of value to leave behind.
[Sidebar:] Everyone HAS a WILL either prepared by your own legal counsel or some write out their own (UN-smart!) or by the STATE, your choice!
Recently, the owner of an NFL team apparently has in his WILL that his TEAM is to be sold 2 years after his death. WHY? If you’re filthy rich or dirt poor, there’s NO reason to dictate what happens to “anything” you leave behind for your heirs, survivors. (let them decide!)
AN INTERESTING SCENE FOR SIBLINGS
Think about YOUR age, we’ll assume, 30 to 50 years old, and your parents have decided to leave their Mountain House to YOUR children rather than to YOU. How does that make you feel? Valued? Loved? Can’t imagine!
Leave a legacy NOT a trail of trouble for someone else to straighten out when you are gone. Actually, you may NOT be gone anywhere but have lost your health, your smarts, to run your business.
Business owners “leave” their business for a variety of reasons. It can turn into a financial disaster, business has died, no customers, sickness, death, etc. Be aware there are options to consider with your insurance adviser that may provide protection for your loved ones for business interruption.
As often said,”look beyond the end of your nose”, put your “things” in order so you don’t leave someone else with a burden beyond their reach. It’s worth the time invested for your own peace of mind and that of your family.
One of the very best options or decisions for a business owner is to SELL the firm when times are right, market conditions are good, values are high. Don’t miss the opportunity to “cash-out” if possible. (my experience!)
Every situation is different. We understand there are 100’s of business owner challenges. Partners, spouses, adult children, etc.
Maybe your adult children are involved in your business and they want to one day take over your assets. Expert legal counsel is needed to handle this issue correctly from your vantage point and for all the family members.
You may have children outside the business with NO interest in being involved in it’s operation or future success except for financial benefits.
Unfortunately, one of the greatest family challenges and often disasters seem to evolve from the distribution of assets left behind by a family member. Usually, greed raises it’s ugly head, disputes about values are raised, etc.
Our reason for bringing this to your attention is simply to avoid all the things mentioned above that can turn your loving family into distant relatives later.