Why your exit plan matters
- More than 200,000 small business owners throughout New England and New York State are planning to retire in the next few years.
- The largest avoidable source of job loss is from business closings due to owner retirement.
- Only 20% of business owners say they have a plan for what to with their businesses when they retire.
- Only 20% of business listings ever sell.
What is exit planning?
An exit plan is a documented process for how to sell a business for a fair value, while securing the retirement income needed and thoroughly accounting for the future management, governance and ownership of the business. It involves building a supportive team of advisors and analyzing the financial, legal and tax options that are part of the desired strategy, and having a backup strategy in case the original plan is no longer the best option.
A carefully documented exit plan offers the best chance for a smooth transition that meets an owner’s financial and ownership goals. Oftentimes, the exit path a business owner originally thought most likely isn’t the path they end up pursuing once they understand the process and have clearly analyzed the pros and cons of various options.
What are the types of exit plans?
Open Market Sale: Business owners can sell to an entrepreneur looking for a new opportunity, hire a business broker, sell to a competitor or customer or supplier. Selling your business to an outside buyer is challenging, nerve wracking, and requires careful planning, but, if it’s possible, it can offer the cleanest break. Click here for more information about Open Market Sales.
Family Transitions: Continuing your legacy through a transition to the next generation of the family can be very rewarding, particularly if your children are already involved in the business. However, the strategy comes with a host of unique challenges and the frequency and success rate of family transitions has been on the decline for decades. Maintaining family harmony can be particularly challenging when there are multiple children, and a business owner needs to make decisions about what role each of them should play going forward. Click here for more information about Family Transitions.
Selling to Your Employees: Whether it’s a worker cooperative conversion, an employee stock ownership plan, a senior management buyout, or identifying and cultivating an aspiring, entrepreneurial employee, selling your business to one or more of your employees may be the most viable option in many communities. Employee ownership preserves local control and sustains quality jobs and economic activity that the business provides to the community. Click here for more information about employee ownership.
Here’s how you do it.
Are you ready to get head start on your exit strategy? Learn about your options from those who know best. Planning for Tomorrow is a video series that will help you get head start on your exit strategy. This 3-module video series is an accessible and engaging guidebook for business owners and advisors alike, and includes real testimonies from small businesses across the country.
Check out the 1-minute trailer below or watch the full series now: Watch now.
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