As excited as you are about building your business today, there will come a day when you'll want to retire. No matter where your business is at that point, you'll have a decision to make. You can choose to sell the business off, allow someone to take over leadership, or close your doors forever.
An exit strategy lets business owners decide what will happen should they someday walk away. Whether a business owner retires or moves on to new ventures, that exit strategy will help you along the way. Potential investors and business partners will sometimes ask about a business's exit strategy before making a decision to partner with that business. While you can create an exit strategy on your own, a small-business adviser can help you with the planning part of things. Whether you contract with one on your own or use a resource like the SBA's Small Business Development Centers, here are a few ways a small-business adviser can help.
Long-Term Funding Planning
Just as you set money aside for your retirement, your business will need to have funding in place to continue after you're gone. An adviser will assess your business's finances and make recommendations based on your own goals. The sooner you do this, the better, since you'll be able to run your business each year with your exit funding in mind.
As a business grows and adds employees, leaders face greater responsibility than they had when they were new. A small-business adviser realizes this and helps entrepreneurs realize the impact an exit will have across the organization. It's one thing for a solopreneur to plan to close a business at retirement, but for a business that employs hundreds or thousands of people, such a closing would be devastating. An adviser will help business owners plan for that level of growth at the beginning, when it usually seems like the business will never experience that kind of growth.
For family-owned businesses, a successor is often picked out years in advance. Business owners assume at least one of their children will carry the business forward after they're gone. Unfortunately, that isn't always the case, so even family-owned businesses must plan for a successor to take over. Whether your business will go to your children, a trusted employee, or someone you haven't met yet, it's never too early to start thinking about it.
If you plan to be in business for multiple decades and don't know yet who will take over when you're gone, it can still be helpful to outline what you want in a successor and put it on paper. That way when the time comes, you'll have an easier time choosing someone. A small-business adviser can help you define those qualities and, if applicable, choose the right person to take over.
Paperwork is an important part of an exit strategy, both for legal reasons and to show investors. In addition to your written exit strategy, you'll need legal documents that outline what you want to happen to your business in the event of your unexpected death. As the date of your exit draws closer, an attorney will be able to guide you through the documents you need to legally transfer your business to your successor.
In the early stages of your business, your primary concern will be the documentation you need to guide the transition once you exit. Working with a small-business adviser, you'll come up with a plan that you can start taking action on now. This will give you the time you need to prepare your business for the day it will need to pass to someone else.
An exit strategy is essential for any business. It's important that businesses create an exit strategy early in their development to allow leaders to work with longevity in mind. With the help of a small-business adviser, an entrepreneur can build a winning exit strategy and have the peace of mind of creating a business with staying power.