Principle Financial advisor Bill Feller believes it is never to early to plan your business exit.
He cited a number of instances in his small Iowa town where a business owner died or was disabled and the business failed as a result of no plan.
A plan is required whether an owner wants to retire or must leave the business due to an unexpected event.
The first two steps are to know the value of the business and identify who you want to sell to.  Per Feller, failure to plan resulted in the following local business failures:

  • It is critical to find a competent operator who can run the business as well as you.  A business owner sold his small restaurant to a son-in-law. The son-in-law wasn't the operator the father-in-law was. The former owner had to return after 2 years to take back the business.
  • Employees may not have the finances to buy the business. Seller financing may help an employee initiate purchase and eventually obtain a bank loan to pay the balance.
  • The business needs to be as successful as possible.  If the owner wants to sell in roughly five years or less, the business needs to show a profit in the business tax records.
Exit strategies require time and effort from the business owner, but are important to ensure continued success after the owner exits.
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