Baby boomer business owners have lived through a number of disasters, including the dot.com bust, the Great Recession, and now a pandemic. Reaction to this latest crisis has ranged from retrenching, “I’m going to work forever!,” to running away, “I’ve got to get out of here as soon as possible!”
So, as an owner, will you stay, or will you go? Is now the time or is it prudent to wait? Either way, developing (and improving upon) your plan is important.
Define your goals
The timing of your exit will be determined by many factors, specifically personal and business goals.
Personal goals: Perhaps the pandemic has inspired a fondness for working remotely, or working less, perhaps spending more time with family. Conversely, you may miss working at full speed in the office and getting back to your plant has never been more appealing.
Maybe you’re motivated to find an entirely new career given the global upheaval. Or it may be that you’re eager to learn more about a topic and an advanced degree is in your future.
Business goals: Eventually, you will transition leadership and ownership. How do you want to do it?
For example, some owners are determined to leave a legacy for the community and employees, so a management group buyout is the goal, or perhaps the next generation is destined to take over the family business. Others want to bring in new investors who can provide an influx of cash and take the company to new heights. And others may have their own vision for the future and are ready to change things up and pivot the company in a new direction.
Each of these personal and business goals are likely attainable, but defining them is key. Once you know where you want to go, there are many roads to get there.
Define Your Strengths and Weaknesses
Defining your business’s strengths and weaknesses is an essential next step. The questions are relatively straightforward: What do you want to accomplish? What resources do you have? What strengths can help you towards your goal? What weaknesses will impede any progress?
For example, your business may have an A+ customer base you’ll want to protect for the future. Or maybe you create unique products, and that’s a competitive edge you want to maintain. Or perhaps your financial position is particularly rich, and it will allow you to take some lucrative risks.
If an external exit is forthcoming, what factors are in your control that can increase the value of your business? Are you structured the right way to exit your business?
Naming your company’s strengths, weaknesses, opportunities, and threats using a SWOT analysis, from the perspective of transitioning your business, is an effective way to identify resources and highlight gaps. The results will can help you move forward.
Define a Path
Now you need an action plan. Given your options, what step will you take to reach your desired goals? What will it cost? How long will it take? What’s realistic?
Most transitions go better when there’s ample time to accomplish goals. Your trusted financial advisors will tell you that it’s never too early to start thinking about what’s next.
Give yourself at least two years, if not five to 10, to build value and exit as you desire. And count on your CPA and other advisors to help you get there.
Let’s discuss your goals and transition plans at your convenience.