Majority of Business Owners Have Defined Exit Strategy
While conventional wisdom has generally held that women are more "attached" to their businesses and therefore less likely to have a clear exit strategy, a new study shows that they are just as likely as men to have long-term plans for handing down, selling, or closing their companies.
The study, conducted by the Center for Women's Business Research and MassMutual, found that male and female business owners -- whose firms were more than five years old and generated more than $1 million in annual revenue -- were equally prepared to exit their companies.
"Contrary to common perception, the vast majority of women business owners (83 percent) have a long-term exit strategy," Marjorie Alfus, chairwoman of the Center for Women's Business Research, said in a statement.
Thirty-nine percent of business owners, both men and women, planned to ultimately sell their business, while 21 percent planned to pass the business on to family members, and only 4 percent planned to close the business.
Among women, first-time business owners were slightly less likely to plan on selling their business (36 percent) than women who had owned a previous business (47 percent). For men, however, there was no correlation between prior business ownership and intention to sell.
The majority of both men and women (85 percent) ranked sale price as the most important factor in the decision to sell their business. Yet, women business owners were much more concerned about the personality of prospective buyers of their business (72 percent vs. 39 percent). More women than men also considered a prospective buyer's plans for the business (79 percent vs. 52 percent) and plans for current employees (86 percent vs. 61 percent) influential factors in evaluating a buy-out offer.
More than three quarters (79 percent) of women planning to sell their businesses intend to retire after the sale. Nearly a quarter (22 percent) plan to own a new business in the future, however.
"This is consistent with the emerging trend we are seeing of women in their 50s launching new businesses after a successful entrepreneurial or corporate career," Alfus said. "These women represent a flourishing and unrecognized new market for financial-service professionals."