Ask any family business owner why they went into business for themselves and the usual answer is to provide an income for them and their families. Most of these entrepreneurs are too busy with the daily grind - marketing and selling the business's products and/or services, managing staff, doing admin and so on - to think about what happens when one day they want out.
But, that take-it-as-it-comes approach to exiting the family business could be short-sighted. Rather, considering your exit strategy from the get-go is a smarter tactic… Reports The Business Journals – an online resource for business in America – 80 percent of small business owners only start thinking about their exit strategy when retirement looms large on the horizon.
But this is akin to leaving your business on a whim – which means the outcome could be unexpected (and not necessarily in a good sense).
Here's why it's wise to have an exit strategy in place:
Handing over the reins to a younger family member is just one of the ways in which you can exit your business. Other options include:
Creating a legacy for subsequent generations is one of the proudest achievements of any family business owner. However, families being families, passing on the torch needs to be correctly managed to enable a smooth transition. When formulating a family succession plan, be sure to take the following into account:
Choosing an exit strategy also involves considering tax; what would be the most efficient approach for your particular circumstances. Talk to your tax advisor about: