A business owner recently elected to close her business and retire. She had ran the business for 10 years, had moved 3 times to 3 different facilities and now, 10 years later, had elected to retire. Another competing business had announced that they were locating in the town where this particular business was located. The competing business sold similar products, had equal high levels of service, but the owners were at least 25 years younger than the other business owner. Was that a reason for the business owner to close her business?
Well, we’ll never know the real answer. However, what we do know is what she told the newspaper reporter– “I am ready to retire.” Well, she is in her mid 70’s, has worked long, hard hours for the past ten years and now really wants to retire.
Was the store closeout sale successful? Well, we sure hope so because the store carried items that were of high quality and value. Interestingly, if you bought one of the store’s products, you never needed to replace it– it was that level of quality.
The real question that we have to ask is this, “Was this the exit strategy you planned?” We suspect that the answer is no, really it is not. Now, we don’t know if there ever was a real defined exit strategy for this business owner, however, suspect that the answer was “No, this is not how we expected to end our business career.”
Do you have an exit strategy? Is it viable? Will it work? As a business owner, you should think about the exit strategy the first day that you open the business. Why? Well, some day you will have to either sell or close the business. Many business owners expect that the sale of the business will fund their retirement. In a few cases, that works out to be true. However, in the vast majority of cases, that is never the case. The products are not worth what the owner thinks they are, the market is not as strong at sale time as it was previously, the “Blue Sky” factor is highly overrated. All of these factors together preclude the normal business owner for realizing the value they expected when they sold the business.
If you are a business owner, now is the time to think about an exit strategy. If you need help, our consultants can assist. We may suggest that one of our strategic partners who practices finance be involved to insure you have the best tools available to exit is a financially successful manner. The time to think about exit strategy is today, not the week before you are too tired to continue with the business.
In the case of this business owner, we hope and pray that all matters are successful. Proper planning now allows the necessary decision making to be done to allow a successful exit from a business.