Business Exit Strategies: So What's Your Exit Strategy?
In June of 2005, the Canadian Federation of Independent Business published a report called “Succession Can Breed Success”. The report found that over 70% of entrepreneurial and family businesses expect to be transitioning leadership or ownership (or both) over the next 60 to 120 months.
Just think—that’s only one or two car leases away!
But the report also goes on to say that most of these companies have no transition plans in place!
In a perfect world, the day that you open the doors to your business is the same day that you start to develop your strategy for getting out of the business. But very rarely do we live in a perfect world. More often, the business takes over the owner’s life-busy, busy, busy, doin’ it, doin’ it, doin’ it: whatever the “it” is that makes your business go.
And then, somehow magically, the time has passed and the business owner comes out of the daze to arrive at 60 or 65 and discover that they don’t have a plan for getting the value that they have built, out to allow them to retire. And, as so often happens, the business represents the most significant portion of their overall wealth. As Michael Gerber, famous for writing “The E Myth” says,
“The only reason to build a successful business is to sell it. And if you don’t sell it - you bought it. And how much are you paying for it?”
While many business owners, myself included, suggest that they are never going to retire, the fact is, that we will all “Exit” our business some day. While it may not be by retirement, it might be by one of the other 3 options for exiting the business - death, disability or bankruptcy. None of these options sound like much fun. So, if you do have a mind to someday leave your business, either by selling it to someone else, or passing it on to your kids, start the planning process today.
As John F. Kennedy said, “The time to mend the roof is when the sun is shining!”