Exit Stage Left
As I pointed out in my earlier venture concept, I plan to
divest myself of the business within 10 years.
The hope is that I will be able to make decent profit on the sale, which
include the current clients, and goodwill.
An exit strategy plan is needed to keep one from going in to
a “goofy loop.” In other words, if you don’t
know when you have reached the point of exit.
How will you know to just exit?
Recently, I had a conversation with my auto mechanic. He and his wife are the small business
owners, and they provide an excellent service.
During our conversation, I learned that they have no plan in place of when
they will leave the business, but they do plan to use proceeds from the
business sale to retire. I remember thinking,
I sure hope that everything works out for you.
I selected to sell my business as my exit strategy. I don’t see a need to leave a business to my
children, let them decide what profession to pursue. The lump sum of the sale would be more
beneficial to me in that stage of my life than leaving the business with
running and drawing some royalties.
I do not see where my exit strategy has influenced any of my
decisions. Since I only provide a
service, people could very easily pursue the next provider rather than me.
Dan, I'm sure it is a delicate balance between knowing when to exit, and the fact that businesses are supposed to be run as if they will exist "indefinitely"... although that's probably just my Accounting classes talking. I'm sure that's how they like large firms run, but small family businesses are a lot different. The thing is, how can they find someone to buy a mechanic shop like that? That seems difficult. I hope to sell my business to a larger firm around the five year mark.
ReplyDeleteHey Dan, I too plan to separate myself from my business after it becomes a relatively stable venture. Once it can run itself and its growth stage is over, I too will be leaving my company. I think I will likely sell my stake in my company or retain a small royalty. I think that royalties can have a huge impact on the economic security of your future. Income is much more important than savings when it comes to a successful retirement.
ReplyDeleteHello Dan, interesting exit strategy. I see why you would divest after being with your business after your ten years, considering there are a lot of similar services. I like how confident you are in you in your exit strategy, there are some things I would charge in mine. But one thing I’m sure of is leaving after five years.
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