3 Steps All Business Owners Need to Take Before they Reach Retirement

3 Steps All Business Owners Need to Take Before they Reach Retirement

Ah, retirement… what does that look like for you?

Is it sailing up and down the coast on a super yacht for six months and skiing in Europe the rest of the year?

Or perhaps it’s having a quiet rural property with a pond full of fish and the grandkids coming to visit on the school holidays.

Whatever your retirement dream is, as a business owner you need to plan for it in advance – well in advance.

Business owners often fall into the trap of working hard in a business for years and years and years, forgetting that one day they will want to stop working, hang up their boots and enjoy retirement or do something different.  

Do you have an exit plan in place?

Without an exit plan you’re racing forward into the future blind. Making decisions that may not propel you towards your retirement dream.  

Start by thinking of the following:

  • “How much longer do I want to/ can I keep doing this?”
  • “Who would want to buy the business and why?”
  • “Does the business revolve around me?”
  • “Will my kids be ready to take over when I’m ready to stop?”
  • “Could the staff purchase the business over time?”

Creating an exit strategy will help answer these questions and give you the focus needed to make the right decisions now for the future you want in five, ten, twenty years. It’s never too early to start planning!

One thing is certain – if you leave your planning to the last minute, you will get considerably less for your business and in some cases, it will be a fire sale, or you will simply close the doors.

Before creating your exit strategy, you need to be clear on where you want to go. As we say on the Owner Manager Program, it starts and ends with you!

3 steps owners need to take to exit their business

Step #1 – What’s the Goal? Paint the Picture

“Vision without action is a daydream.
Action without vision is a nightmare.”
Japanese Proverb

It’s time to get really clear on what YOU want for YOUR future. Once you have a clear goal for your retirement and the value you want/ need from the business, then step #2 is a lot easier.

Don’t do this alone, speak to others and get feedback and advice. Talk to your family and those closest to you about what they want and speak to specialist advisors in business values or business sales.  

Begin with the “End in Mind” is a common phrase in business and in step 1 you’re trying to understand what the “End” is.

Step #2 – What’s the Strategy? Prepare the Plan

Now that you know where you want to go or the “End”, you can make a plan to get there.

What do you need to do to your business to make it attractive to a future buyer? What steps do you need to take to prepare for your children to take over the business? What do you need to do to get you out of the business?

This step is the hardest step to do on your own and it’s why we spend a lot of time on the Owner Manager Program giving business owners the tools and knowledge to create solid plans to get them where they want to go.

For a lot of business owners one crucial initiative is putting in place a leadership team to support the owner stepping back and out of the day-to-day operations. A well-structured leadership team will also help family businesses transition and mature more smoothly.

For those looking to eventually sell, a business that can operate without an owner being heavily involved is far more valuable than one that relies on a new owner having to take control of the reins from day one.  

Step #3 – Put the plan into action! Build the Picture

Once the plan is defined, it’s time to take action. Every major business decision from here needs to relate back to the strategy – hiring the right people, developing new products, finding new opportunities, building value… Stick to the plan so that you can build the picture.

Also remember that a prospective purchaser is going to buy opportunity and upside. Make sure there is value in your business and that you leave some opportunity on the table for the new owner to grow their investment.

Conclusion

It’s sad when we see owners that just want to get out but have left their planning too late or not planned at all.

You are not going to work forever, so if you can build your business in a way that will afford you the exit you want, every step along the way will be far more meaningful and more rewarding.

By having a clear vision of where you want to go, building the plan of how you’re going to get there, and then taking the steps needed to reach your goal – owning a business will get a whole lot easier.

“As owners of businesses we all know where we want to be, but we don’t always know how we’re going to get there. This course [OMP] has given me clarity. Has given me answers to all my questions around how to get to where we need to go.”

Glen Grohn | Jac Civil (OMP’18 Alumni)

If you want help finding clarity and creating a strategic exit plan, consider joining the Owner Manager Program. What got you here, won’t always get you where you want to go….

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