Business Exit Strategies for Baby Boomers
A key question posed by any business turnaround or profit improvement specialist, when they are asked to assist a business, is: “what is the exit strategy for the owners and directors?”
We’re astounded that some business owners don’t have a clear idea or strategy about what they should do, and when, to achieve their exit strategy.
That is, if they have an exit strategy at all.
We don’t all have extended retirement time frames – unlike Richard Branson, who said in an article in The Australian (30-31 July 2011) that he ‘has no plans to sell up and retire, and at this point never will’.
Some business owners think they will sell or retire. While they may have thought through the money side, they haven’t considered the physical and mental side of retirement.
If the business has been their ‘baby’, can and will they sell? And if junior members of the family are appointed, can the patriarch/matriarch of the family stop interfering in the business?
Here are 4 business exit strategies to consider:
- Sell the business
- Appoint family members as Directors
- Remain a Director and appoint an independent Chair and an experienced CEO
- The worst strategy of all – don’t think about it, and stay in the business until something happens. Be warned – eventually something does happen.
Recent BizExchange research indicated that the number of small businesses for sale has increased to a five year high.
So what can baby boomer business owners do?
Selling the business is a good strategy, if the business is profitable.
But what if the business isn’t profitable? In this situation, turnaround practitioners can help as we concentrate on returning the business to profits with an eye on the end time frame. It may not be a quick fix, but we do provide an independent view of the business and a list of options. We can also help to implement one of the exit strategies that the Director chooses.
Reflecting on the Biz Exchange research and our experience in helping businesses that have lost their way, we are seeing a lot of business stress with clients and potential clients.
Key business stress indicators we see are:
- Your business has been profitable in the past and has provided for you and your family, but the business is now making a loss.
- The principal Director is between 55 and 65.
- You’re tired of the pressure from working in the business for 10-15 years.
- Your children have looked at what you do and don’t want to follow in your footsteps.
- You’ve tried partners, managers and consultants but they don’t help.
- You‘ve tried everything you know to stem the loss of sales, or other losses, but nothing seems to work.
- The strategic plan is about working in the business, not on the business.
- Your partner has built their own life while you’ve been wedded to the business.
- Lastly, you believe your accountant has not helped.
One of the comments we invariably receive when we are consulted and appointed to assist clients is: “We wish we knew about you guys 12 months ago”.
In business, as in life, everything has a natural time limit. We do get tired, we do get disappointed, we do lose attention to detail, we do try everything we know to increase profit and we do attempt to obtain help. These are natural steps for a business owner whose company is distressed.
There are options, but to start the process the Director or a family member needs to make the hardest decision of all which is to pick up the phone and make the call.
Vantage Performance is a leader in sustainable business improvement, winning national recognition in 2008, 2009, 2010, 2011 and 2012.