What will you do when you've lost the spark for running your business?
This is something busy owners rarely consider. After all, who has the time to plan for an exit between finding new business, managing employee problems, and watching the bottom line? Whether you choose to consider your exit strategy or not, the fact is, it will arrive at some point.
Resources abound to assist those who've made the decision to go into business. There are scores of excellent business books, coaches, advisors, consultants, and government agencies who offer expert guidance to navigate this exciting and often frightening time. However, far less is said about how to transition out of a business.
According to the U.S. Small Business Administration, approximately half of all new establishments survive five years or more and about one-third survive 10 years or more. Should an entrepreneur therefore expect to slowly fade out of business after 5 or 10 years? Not necessarily. If the fire still burns in you when you walk through the front door of your enterprise; If you're still passionate about your company's service mission; If you still feel an extraordinary sense of satisfaction in knowing that you've created employment opportunities for others; If you continue to place high value on the flexibility to work your own schedule; and If you're still motivated by having the ability and freedom to chart your own course -- then by all means, continue to run your business actively. However, if you don't feel these things, there are other options you can consider that might yield a new level of satisfaction and financial independence.
For instance, you may want to sell your business one day in the future. To accomplish this, an owner has to begin to look at their business through the eyes of a potential buyer. Heath Goldman, of ICON Wealth & Legacy Partners, suggests that business owners ask themselves "Is the current structure of my business ultimately the best structure for the sale of my business?" Goldman also suggests that owners resist the desire to use their business as a personal piggy bank as this approach may look undesirable to future buyers. Learning the strategies to legally sell a business, particularly tax free, is a planning process that begins long before you make the decision to actually sell. Seek the advice of a qualified business manager early to ensure your business hits its highest selling potential.
If selling isn't the plan for you, perhaps you want to leave your business as a legacy gift to a child or other family member. For those who wish to take this route, succession planning is key and can be a lengthy process depending on your successor's need to obtain an advanced degree and/or a sufficient level of senior-level work experience within the company.
The reality is, there are many business owners who will, over time, become burned out with the demands and rigor of full-time entrepreneurship. If this is you and selling your business or passing it on to a family member seems undesirable or is not feasible, then why not consider owning your business passively? When you first went into business, chances are you functioned in multiple capacities and 60-70 hour work weeks were not uncommon or may still be the norm. Owning your business passively means that you're still involved in the leadership of your company, but on a significantly reduced scale. To accomplish this, you have to build out the major functions of your business so that they operate successfully with minimal engagement from you. This means having solid managers in, or outsourcing of, core functions such as operations, finance, sales, and HR. Owning your business passively will allow you to spend more time participating in your favorite activities or hobbies; connecting with charities that you're passionate about; developing new enterprises; and/or dramatically reducing your work hours to spend quality time with loved-one's.
Who's to say that only one strategy is best for all? What's important is to plan for the future, despite the demands of the present.
This blogger graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.