“Exit Planning”           
Sell your business before it’s too late.

If you haven’t sold your business by the time you reach age 60, you probably never will. That’s what research and our own experience have proven time and again.

But before you slap a For Sale sign in the window and book your cruise, take a few minutes to consider these three very important questions.

What will I do after I’ve sold my business?

Sounds simple.

But it’s probably the most frightening reality business owners face.
Most owners are quite naturally wary of selling their business. For years they’ve been building and nurturing their companies. The business – doesn’t matter whether it’s the deli on the corner or a huge chain of sports stores – has been the focal point of their day-to-day existence. Their self-image is defined as the owner. Rarely is any decision made without first considering the consequences to the business.

The reality is that most business owners soon tire of just playing golf. Most, after a rest, re-channel their energies into ventures that create additional wealth, maybe with less risk, personally and financially. If a business owner is smart enough to start a business, make it successful, and then sell it, she is probably going to be smart enough to figure out what to do with her new financial independence.

In fact, it’s a great time to renew relationships with spouse, family and friends, learn how to relax and have fun, take a trip and give back to the community.

When should I sell my business?
From an economic standpoint, the best time to sell your business is at the point at which the sale yields financial independence.

Financial independence is defined as having enough principal invested to generate an annual cash flow that supports the type of life you want to live, without having to draw on the principal.

For example, if your goal is to have an income stream of $180,000 before taxes, you’ll want about $ 3 million after tax to provide that $180,000 at 6% return. If your company will never sell at the price needed to generate financial independence, you should consider three courses of action:

• Grow the company through acquisition.
• Sell the company at the maximum price and reinvest in another company.
• Reduce the cost of your lifestyle.

Why should I sell my business?

There are many personal and financial incentives that inspired you to become a self-employed entrepreneur. There is creative expression and a deep satisfaction in what you do. Wealth is probably secondary.

There are also lifestyle choices that factor into being an entrepreneur.

The last generation of business owners was greatly influenced by the experience of growing up in the great depression. They were driven by a fear of having nothing, and losing everything. They were builders and savers. They were not spenders.

Lifestyle – the choice of today’s entrepreneur.

The current generation of business owners consists of baby boomers now entering their late forties and early fifties. Unlike any previous generation, they arrived of age at a time of sustained growth, and, as a result, have become the greatest consumers in history. They’ve worked hard, but have tried to balance work and play. Unlike their predecessors, this generation of business owners has lifestyle as a priority.

Today’s business owners are smart enough to realize that the best time to sell is when they can still receive a premium purchase price, are still young and healthy enough to enjoy the fruits of their labour.

However, many business owners continue to put off the sale, refusing to make a proper exit plan. They wind up stuck in their corner offices, too afraid to leave, yet unhappy in staying.
As we’ve mentioned already: if a business owner reaches age 60 without having sold the company, it will probably never happen.

Unless you commit to an exit plan now, it becomes increasingly difficult for you to leave your business. Many business owners resign themselves to the notion of dying in office. But when asked what they would have done differently if they could have done it over, the answer is always the same: “I should have sold sooner, when there was more life ahead of me to enjoy, and still sufficient time to enjoy it.”

Now is the time to ask yourself these three challenging questions, make your plan, and then gracefully make your exit.

Before it’s too late.