Hello friend!
When you started your business, before the reality of things set in and you got busy in your business, what did you envision as the outcome? Did you simply want to be your own boss, or did you have grander ambitions? Perhaps you dreamed of building something you would pass on to your kids. Or you saw yourself building to sell, letting this current business fund your next one, or even your retirement. These plans and schemes start feeling far away now that you’re knee deep in keeping the lights on, right? Still, at some point, if luck and hard work allow your biz to thrive, you’ll want to retire, transfer or sell it. Each of these does require a plan that you take the time and care to ensure the best outcome. The more time the better in all three scenarios. How much time? Well, let’s break down each scenario to find out.
The Technician
You are a master at something and wanted to focus on that one thing. You started a business alone (or mostly alone) created one that paid the bills and gave you the work/life balance you wanted. You never thought about scaling or diversifying. You wanted to do only your thing and, perhaps with the aid of a VA, accountant and/or social media person, you did just that. You had a good life, but at some point, you want to leave working behind, close your doors and retire. You could, depending on the state of your business contracts, decide to stop working and end the business in a matter of weeks. But should you? Would you want to? Odds are that as you get closer to wanting to retire, you’ll take on fewer new clients, but you owe the ones you have fair warning and help finding your replacement. Give yourself a good two-year runway to close everything down.
The Founder
Maybe you started this business with a vision of turning it over to your children one day—a legacy. The joy and struggle of that is that it’s now always easy to keep family business and business business separate. It requires a deft touch, several back-up plans and a well thought out succession strategy and a will or living trust (depending on your you situation) to make the transition smooth. After all kids grow up and might want their own lives, or perhaps some work in the business and some don’t. Family businesses can also include the siblings of the founder as well as their children and spouses. How do you divide things up then? When and how will you start to step back once you get to where you want to retire. Keep your vision clear, your estate documents up-to-date and the lines of communication open for the rest of your life to ensure that everyone understands how you want your business to survive you.
The Builder
Every building needs a foundation, but the person who does the digging isn’t always the person who puts on the ceiling. Some founders build a business, always planning to sell it. A few manage to do this more than once. This can be a solid strategy for those that recognize that they prefer the start-up phase over the scaling and growth one. Still others want to run it for a long time and sell it as part of their retirement plan or have their family sell it after they pass. Again, this can prove a solid strategy. The key to all of these is that you must create a business that isn’t centered on you and you’ve ensured that you’ve done everything and engaged professionals to prepare all the necessary paperwork to ensure your heirs have everything they need to sell. Remember generally takes a few years (yes, you read that right) to get things ready and can take up to 2 years to sell. Plan accordingly.
Whatever kind of business you built; you will get to a point where you'll want to stop. Some exits will be done slowly as you turn over the keys to the kingdom you created. Other can be done more quickly, but in order to ensure a gentle exit, every business owner needs to figure out when and how they want to retire. How do you figure that out? Well, once again, it's time to refer back to The Talk. You need to start now to make sure that whatever exit you get, it will be easier for your family to follow your instructions.
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