As a business consultant, most of my conversations with small business owners are both exciting and stress-inducing. Most small business owners can discuss ideas of growth and expansion. Some can even lay out detailed plans for the next several years. However, many small business owners are unable to think of a future without the thought of their small business. The day-to-day operations, blood, sweat and tears in conjunction with emotional highs and lows distract small business owners from contemplating an exit strategy. There is also the common sentiment: “This is my baby; I could never do that.”
In my own personal experience living with an entrepreneur, I have witnessed the adversity, hardship and commitment that small business owners put into building and growing their business. And yes, it does become their “baby”. But all babies grow up, and move on to live their own life, and as parents we embrace that. Why wouldn’t small business owners do the same?
I think it is important for small business owners to reflect that while their small business is a significant part of who they are, it can sometimes take time away from those things which are most important to us: family, friends, community, and our own personal time. Small business owners help so many and give so much to their customers, their staff, and the community. To continue that legacy, and for your own personal mental and physical health, to move on requires a well-thought-out exit strategy. In most cases, planning 3-5 years would provide the small business owner with the most options.
I recommend small business owners start planning an exit strategy by asking themselves a series of questions:
- Can my business operate without me?
- Do I have family members or employees who would want to take over my business?
- Do I know how to value the worth of my business?
- Do I understand the risk and liabilities of my business as it grows?
- What do I want to do next?
- When do I want to retire?
- Will selling my business provide me with the extra money I need for retirement or save me money in the future?
- Do I understand the tax implications of selling my business?
- Will my employees be okay?
- Will my customers be okay?
As business owners we need several plans — hiring plans, benefit plans, and of course, a flexible and fluid exit plan/strategy. If you would like help in valuating your business and walking through these questions, the UMW (University of Mary Washington) SBDC (Small Business Development Center) can help. If you are a client, please contact your consultant to schedule an appointment. If you are not already a client, you may register for free, confidential business assistance by completing a Request for Consulting form on our website, umw.edu/sbdc.