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:
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:
15.4: Making It Work
15.6: 4 Roads To Letting Go