Small Business Resource

Few things are certain in business life, but there is one universal truth: Be it a carefully planned decision or the result of fate’s swift hand, someday you will leave your business.

Your exit is going to take place in one of two ways:

1. You will transfer ownership of the business during your lifetime because you’ve decided you want out. Without planning, this will probably mean that you have to liquidate. With planning you will be able to sell the business to a third party, to key employees or co-workers, or to family members – all at minimal tax rates.
2. You will die or become totally disabled, and the business will have to be liquidated unless some type of business continuity arrangements have been planned and documented.

Most owners measure their satisfaction with their business in terms of the income, wealth, identity, challenge, stimulation, satisfaction and pride that it provides to them. Consider another definition of success that measures a business – not only by how well it operates under your ownership and by the benefits it provides — but also by the rewards it will bestow when you leave it. Because in the end, what you really want and need from your business is the ability to leave it – under the most favorable conditions. The only way you as an owner can do this successfully is to create an exit plan as early as possible and stick to that plan as long as you maintain your business.

Developing Your Exit Plan

What exactly is an Exit Plan that will allow you to leave your business in style and how do you create it? Despite the almost infinite variety of businesses and business owners almost all exit plans contain common elements or goals. Generally these goals fall into three broad categories:

1. To create and preserve the value of the company;
2. To provide a means to exchange that value for money with the least tax consequence possible;
3. To meet personal and family needs by providing security and continuity to your business and for your family either upon your planned departure or if disaster strikes – upon your death or disability.