When you have risked your livelihood, rolled up your sleeves, put in the work and emerged as a successful business owner, you are street-tough and trained to take care of yourself. Entrepreneurship is a survival skill—and, in many ways, a stubbornness that stays with you for your entire life. It’s a phenomenal trait to have in business, but one that doesn’t always translate to a healthy exit, where there are other stakeholders involved.
A Legacy for Your Family
Any owner selling their business will naturally think and speak in “I” statements: “I think the business is worth $1 million,” or “I think I should wait until I can get a better price.” Your wants and needs are certainly valid while running the business, but when it comes to an exit, it really becomes about the business surviving for the employees and the equity payout for your spouse and/or heirs. There is no one better to make the exit successful than the business owner and leaving it to your employees, spouse or heirs will threaten the legacy that you built.
There are two types of legacies: the organized and the disorganized. Either you are going to actively manage your exit to ensure your family is taken care of, or you’re going to leave it to them to deal with. I’ve worked with too many estates to tell you, the definition of an exit by the heirs is more about survival and it’s definitely not about legacy. If you don’t develop a successful, strategic exit plan while both you and the business are healthy, your legacy will only decrease in value and increase in complexity after you die. This same logic applies to your personal life where the whole purpose of a Trust—to keep your loved ones out of probate and equip them with instructions for moving forward in your memory.
Responsibility to Your Employees
If you put your business in a position to potentially lose its value, vision, and structure—in other words, if you hold on too long and don’t have a plan for a transition or transaction—it is a disservice to the very people who have helped your business thrive over the years. Are you going to place your desired dollar figure over the opportunity to sell to a bigger company that can take your business into the future and allow your employees to grow professionally, earn a larger salary, and support their families? Your earliest hires might be people who came to you out of high school or college. You gave them their first job. They stuck with you through thick and thin. Don’t let your business decay; it’s not fair to them.
The Window to Do It Right
It’s your business that you built, and so your exit is inherently your decision. Just remember that running a business and planning an estate are different arenas. It is extremely difficult for a spouse or heir to deal with a business post-mortem. They may not be risk takers or know how to run the business like you. There is liability involved, and the business value can wither away quickly—all of this during a time of grief and pain.
When it comes to the right time to exit please look deeper than “I”. I want, I deserve, I think, I, I, I. The business is its own entity, its own being, and its own person. Look at an exit as an event that allows the business to go on beyond you. Look out for yourself, your family and your employees You are the best qualified to make a successful exit so develop a plan, put that exit plan into action and don’t leave it to your heirs.
When a business succeeds, it becomes a mechanism for others to live fulfilling lives. As you consider your exit, keep those lives in mind and look to us for honest, reliable guidance.