Are you questioning the timing of an exit or succession plan, wondering if it’s time to sell your business or just take a step back from it?
It can be a tough choice as both options have pros and cons. Here’s a look at each scenario and their advantages.
Signs It’s Time For Change
As the Midsouth’s largest independent brokerage firm, we speak to business owners every day about their reasons to sell. Many find burnout occurs after even just a few years of the high stress that comes from running a business.
Some owners grow tired of the monotony from the same daily routine of operations. It’s normal to want a new routine after running the same schedule day in and day out for decades. You may find other business opportunities that interest you and want to venture into different industries.
Sometimes, the public’s decreasing interest in a business and declining profits are the main reasons to sell. When business declines, business owners start to question how long to keep the business or if they have the passion to keep adapting to an ever-changing industry.
The main reason we hear from business owners is about retirement. Baby boomers make up the largest number of small business owners today, and many are looking forward to another chapter of life. One that involves financial freedom and the time to focus on other interests.
Option 1: Keep The Business, But Step Out of Daily Operations
One option is to keep the business, but step back from daily duties as the owner or manager. In this case, you can hire someone else to continue the operations. This allows you to keep a steady stream of income for you and your family, while freeing you from the stress of everyday involvement.
Whether this option is possible may depend on the business and how integral you are to its operation. For some, this option provides passive income while doing minimal work and moving toward semi-retirement. For others, the cost to hire a replacement simply doesn’t make sense financially.
Option 2: Sell The Business
Selling a business allows you to capitalize on what you have built. With the profits, you can move toward your next phase of life, whether that’s retirement or another business venture. In the current market, business owners are seeing maximum profits from the sale of businesses. The past couple of years have marked historic highs for sellers.
While it’s impossible to time the market, there really hasn’t been a better time to sell and we don’t expect buyers to lose interest soon. Here are some signs it’s the right time for you.
Advantages of An Exit Strategy
Whether you want to sell this year or try stepping back first, an exit plan provides a careful departure from a business. In either case, it allows a smooth transition from one management team to another. It’s also a way to map out your own next steps for where you would like to spend your time away from the business.