ST. CROIX INSIGHTS
We don’t spend enough time on the exit strategy
BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
The great thing about life is that we can go through so many different seasons. From just starting out to dating – to getting married – to having a family. We are always seeking that day we get to retire and enjoy 365 Saturdays. As a business owner, the journey is usually filled with unknowns, “what if’s” and a whole lot of uncertainty of how to create a smooth path. Most leaders couldn’t just give a two-week notice like our employees. Even business owners need to think about their exit strategy. Oh, the dream of being able to give a two-week notice and being able to walk away…
But for business owners, your work is in your DNA and a lifestyle 365 days a year. Yet, I contend one of the most important decisions you’ll have to make is when to transition into your next season? That next season may not be clear in your mind, but it is clarity you should strive for as you continue your journey.
Planning your exit
Transitions aren’t easy and probably hard to contemplate. They require us to examine our lives and ask a host of questions we probably are not ready to address.
Who am I outside of my business? Will I still be relevant? How will my wife and I get along? Is she ready to have me in charge at home (the answer is no just in case you didn’t know)? Drilling down on these questions isn’t always easy and when you do many more questions will occur.
Over the years, M-O-N –E-Y is usually the most important topic on business owner’s minds. Money from the standpoint that most know or feel they haven’t saved enough outside their business to “walk” away without hitting that magical number. But that requires the owner to build a tip top organization that a buyer can’t shoot holes into during the acquisition process.
My business owner clients, have two or three different buckets of money they are funding with a couple of objectives in mind. One, if they don’t hit the right multiple or EDTIDA number, they have other options. For these owners, more than 75% of their retirement isn’t dependent upon the sale of business. Bam! That’s just down right cool. Even better are the ones who don’t want to even factor the sale into that walk-a-way number.
Remember, preparing your company for sale will take money. Do you have the right management team in place? Are you willing, or need, succession planning? Are you just going to sell it outright and walk away? Do you need to retain a few key people to hit your sales numbers? Again, these are hard questions to answer without some deep soul searching.
This whole business owner transition has become big for consultants as boomers age at and move to the next stage of their life. With so many consultants offering a plethora of services I recommend interviewing a few to determine who fits your needs. Don’t be afraid to investment money in this process. If you need help in selecting a business owner transition consultant, give me a call. I’d be happy to give a you few ideas based on your situation.
St. Croix Advisors, LLC is an investment advisory firm. We seek to help our clients achieve financial simplicity. Before implementing financial ideas you read, work with a Certified Financial Planner (CFP) or CPA for advice or recommendations that fit your own financial situation.
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