With any small business, one significant measure of long-term success is exiting the business on your own terms. Many people are surprised when they learn that exiting a business was unsuccessful. Others are surprised when they learn that other people in their life have expectations about how they exit the business. For now, we will assume that you have a suitable successor in mind to take over your operation. (This is also harder than it sounds and we will discuss this issue in a later post.) To successfully begin a business transition plan you have to be satisfied with the answers to the topics below:
Lifetime Income Plan after You Exit the Business
Do you have enough income in place to meet your true cost of living for as long as you and your spouse live? Remember, the average 60 year old couple today will both live to see 80 and one will likely see 90. And average means that half the people will live longer than this. A fee-only fiduciary financial planner can help you answer this question for assessing your business transfer strategy.
Financial Status of New Business Owners
The business transfer needs to in a position so that the new owners have the income they require to succeed, while also paying you out as an exiting owner. For this to happen, everyone must understand what the new owners need in terms of capital for the business transfer to be successful. This question becomes much easier with the help of a fee-only fiduciary financial planner.
Are You Ready to let Someone Take over the Business?
Ask yourself this, are you ready to let someone else call the shots in the operation that you built? This is a serious question, and the input of your spouse and friends may help you clarify your feelings.
Pursuits and Interests after Transferring the Business
What do you love besides your business? Do you have hobbies and friends outside it? Do you feel you can contribute to your community and family without the business? Can you imagine leaving and being just a visitor should you return? Transferring a business is difficult, especially one such as a farm when you have lived there and built so much up over the years. We cannot answer these questions for you, but if you can say “yes,” then we can help you proceed with your business transfer.
The Health of You and Your Spouse
Do you and your spouse have good enough to enjoy some time off? If not, how will your health needs impact the business transition? Will you be busy with health issues and not available for the transition? Will medical expenses require additional income? If you are in great health, you need to consider how long you will live. You may have 30 years to pursue your hobbies and enjoy your family. Then again, maybe you will want to venture on a second career. There are many other questions and topics to address before we begin a business transfer. If you can answer these, though, then we can start to work towards exiting the business. If this blog has you starting to think about your own situation, get in touch with my office email@example.com. I am always happy to visit with folks who are working on their business transition process. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.