There’s an old business adage that says the day you start your company is the day you should begin planning to leave it. While that might be unrealistic, the sentiment is sound. The more time you give yourself to plan your exit, the more likely it is that you will exit smoothly.
Determine what you want. Some business owners feel strongly about keeping the company in the family. Others simply want top dollar for the business they’ve worked so hard to build.
Take time to consider your long-term goals. What you ultimately want out of your business will determine how you will run it and how and when you should leave it.
For example, how much cash will you need for retirement? What is your estate plan? Do you have a succession plan? Are there ready buyers? Being realistic about the future may cause some discomfort, but it’s required so you can exit your company on your terms.
Keep working on the business. Older owners tend to get complacent about the business. They might stop investing in research and development, avoid new technology, or ignore the latest industry trends simply because they are either set in their ways or they’re weary after tending to the company for so many years.
This is a mistake. To maximize value in your business, you must keep it in top shape. The pool of buyers—not to mention the price you’ll get—for a vibrant, progressive company is much more robust than for one that’s behind the times.
Make yourself dispensable. You are likely proud of your company and its impact on the industry and community. It’s understandable to have a fair amount of ego in your business success—after all, this company is your “baby,” and you, your family, and colleagues have made it what it is today.
However, for your company to thrive, you must make yourself dispensable. The company must be able to survive without you at the helm, or you’ll have little to sell or pass to the next generation.
Take steps to grow new leaders by creating a rigorous training program and sharing your customer relationships with the next generation of management. Be strategic about working your way out of a job.
Create a road map. Many owners joke about what they’ll do during retirement—play golf, sit on the beach, or sail around the world. But this is a serious topic. What are you going to do?
Create a road map that lets you see what the future looks like. Insert dates by which you need to accomplish certain goals, like getting your golf game in shape or buying that sailboat. Also, keep in mind that entrepreneurs generally get antsy with too much free time. Volunteering or even starting another company may be in your future!
Consult with your financial advisors now to discuss the big picture. Sound planning now will facilitate exciting choices ahead.