BUSINESS SUCCESSION FOR SMALL BUSINESS OWNERS: PLANNING YOUR EXIT
You own a small business. It’s been a good ride, but for whatever reason you want to make an exit without harming the business you worked so hard to build.
How should you make your exit?
It doesn’t need to be complicated.
But it helps to establish your succession plan as early as possible– preferably within two to five years of your expected transition.
(Even if you aren’t sure exactly when you will leave the business, it’s crucial to have some kind of plan in place, in the event of an emergency situation.)
If you don’t have a plan, what would happen if the economy suddenly took a turn for the worst in those final months or years before leaving your business? Would you be able to mitigate the harm?
What if you or one of the other business owners had an unforeseen serious illness or injury– or even an unexpected death? How would your desire to leave the business be affected then? Would you still be able to leave or would your departure risk losing everything you worked so hard to build?
If something happened to you, would your loved ones have the power to manage and control your business? Would they have the leverage to sell your business at a fair market price or would they be obliged to enter into a fire sale– selling the business for a fraction of what it’s really worth?
Since we never know when “bad things” will happen to us and since effective planning takes a modest amount of time and effort, it’s crucial that you act quickly and diligently after making the decision to transition away from your business.
There is no one-size-fits-all solution when it comes to your business’ succession planning. The key is not only finding advisers and professionals who recognize this important point, but taking the time to talk with your advisers about your values, goals, concerns, and all of the other important factors pertaining to your unique situation. By doing so, you will put them in the best position to design a unique plan that’s right for you.
The sooner you act the better.