Exit Strategies: Plan Early and Often Begin Your Retirement Planning Now

Most entrepreneurs starting a business usually don't place "Develop an exit strategy" high on their priority list. Most business owners nearing retirement wish they had.

That's Lesson #1 from business and estate planning professionals: consider your exit strategy from the very start - before you even open your business, in fact. Having an end in mind (and a timetable) can affect how you structure your business, which can have tremendous tax and inheritance consequences down the road.

Yet those same professionals also know they're fighting an uphill battle. They cite three main reasons business owners put off planning for tomorrow until… well, tomorrow:

Procrastination. Most new businesses owners work long hours learning the ropes and doing everything they can to keep their new baby growing during its critical early years. Formulating an exit strategy and developing a succession plan are easily pushed aside "till later" by the everyday demands of business survival.

Denial. An unwillingness to confront one's own mortality or decline definitely plays a large role. Why face unpleasant realities when you can focus instead on growth and expansion?

Attachment. A person's identity, particularly a founder's, can become wrapped up in their business. For many entrepreneurs, it's difficult to realize there comes a time to let go - and that they will have a life afterward.

There are four basic ways to leave a business:

  1. to heirs or family
  2. to a key employee or team
  3. to an outsider
  4. to no one, by shutting it down.

Each of these options is made easier by having an exit strategy in place long before the time comes to leave. And each has its own set of choices and complications. Before proceeding to the details of each, a few general tips:

  • Gather a team of trusted specialists and advisors to help you navigate toward your long-term goals. At a minimum, this team should include the following professionals: an estate planner, a financial and/or investment advisor, an attorney (preferably with expertise in business, franchising, and estate planning), and an accountant or CPA. Also build an informal board of advisors, which could include family, friends, business associates, fellow franchisees, mentors, and your own management team.
  • Run your business as if a buyer is arriving in the next hour. Maintain careful records that can be read and understood by prospective buyers (not just by the 83-year-old bookkeeper you've employed for the past 47 years). It's a lot like cleaning your house before company arrives - even if that visit is decades away. Keep good records and run a tight ship.
  • Find professional help. Plenty of planning professionals specialize in franchising and its unique legal and financial issues. For instance, as a way to protect their brand identity, franchisors usually maintain a right of first refusal on any potential sale of a franchise unit. And if your franchisor doesn't already do so, ask them to provide sessions on retirement and transition planning, either at franchisee meetings or as a part of regional training. Franchisors have a strong interest in maintaining the good health of your unit(s) as part of the overall system.
15.4: Making It Work
15.6: 4 Roads To Letting Go

Social Reach:

Viewer Response:

comments powered by Disqus

Franchise Guides »

Featured Choices:

Popular Choices:

Hot Opportunities

Kitchen Solvers Franchise Opportunity

Kitchen Solvers
As a Kitchen Solvers franchisee you will not need any prior remodeling or...

Taco Bueno Franchise Opportunity

Taco Bueno
At Taco Bueno, we continue to make Tex-Mex the right way. We prepare our...

Kids 'R' Kids Franchise Opportunity

Kids 'R' Kids
Kids 'R' Kids Learning Academies is a pioneer in the early childhood...

Batteries Plus Bulbs Franchise Opportunity

Batteries Plus Bulbs
Whether you're an existing multi-unit operator with a non-competing brand...

Nestle Toll House Cafe by Chip Franchise Opportunity

Nestle Toll House Cafe by Chip
Nestlé Toll House Café by Chip is the only major, national dessert café...

Jimmy's Egg Franchise Opportunity

Jimmy's Egg
Jimmy's Egg is now offering a unique opportunity to a select number of...

Camille Albane Franchise Opportunity

Camille Albane
Decades of trendsetting chain-salon experience in Europe give Camille...

El Pollo Loco Franchise Opportunity

El Pollo Loco
The secret to El Pollo Loco is great-tasting food. Our menu has a broad...


Learn More

2016 MVPs: Celebrating This Year's Outstanding Operators    

Multi-Unit Franchisee Magazine

Issue III, 2016

Multi-Unit Buyers Guide    

2016 Multi-Unit Buyers Guide

Special Edition

A Franchise Update Media Group Production
Franchise Update Media | P.O. Box 20547 // San Jose, CA 95160 // PH. (408) 402-5681
Copyright © 2001 - 2016. All Rights Reserved. Site Hosting Provided By: wishVPS on FUMG3

In Loving Memory Of Timothy Gardner (1987-2014)