Seven tips for business owners planning to retire
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Going into business for oneself means years of long hours, hard work and crunching numbers to keep things going. But the work doesn't end when it comes time to retire.
Luckily for Crossroads business owners, a new resource is available to help ease the transition.
Joe Humphreys, director of the University of Houston-Victoria Small Business Development Center, recently completed training through The Apogee Center, a national organization aimed at training business consultants in helping entrepreneurs pass along that torch.
The program, which spans several years, aids in determining which options to explore, how to get the best return on an investment, performing evaluations and more.
While prices vary, Humphreys said the program costs a maximum of $14,000 throughout that time frame.
Retirement issues will become increasingly important in the coming years because between 60 and 70 percent of all business owners nationwide plan to transition out of the company in 10 years or less, said Odee Ingersoll, president of The Apogee Center.
That overturn was supposed to have begun already, he said, noting the recession pushed many people's plans back.
"Now what's happening is the market is starting to improve, and they've gotten about five years older," he explained. "Health or age will force them out of the market, or they'll come voluntarily."
Humphreys said it feels good knowing he can help business owners transition.
"Is it a passion? Yeah," he said. "And it's probably more a passion for me than it could be for some of the younger business advisers because I'm closer to that, and I've walked that rope. It's exciting."
Here, Humphreys and Ingersoll offer tips to business owners preparing to pass along the company.
Stop worrying; start planning.
Many business owners spend hours fretting over what to do when it's time to leave the business but little time laying out an actual plan. In an ideal situation, the business owner will set out an exit strategy when they're developing that initial business plan.
Consult a trusted adviser.
Business owners tend to be private people and often don't want word getting out when they prepare to sell a business. Find confidential help - regardless of who that might be - early on that can help ease the process along.
Give it time.
It generally takes three years of preparation for a business owner to get to a point where he or she can maximize his or her return and be in a healthy place to move on. A succession event, such as when a family member takes over, typically takes even longer.
Be able to back up your story.
An entrepreneur looking to purchase your business wants to know whether he can expect a return on his investment, pay the bank back for the loan and make money for himself. Have the proper financial statements on hand. If you can't show him or her your numbers, making the sale will be tough.
Consider keeping it local.
Selling to an out-of-town owner means the jobs and tax benefits remain in your community, but the wealth created by that business goes to wherever that new owner lives. That owner will likely utilize professional services from where he or she lives, as well. Look for an area owner, possibly even a person - or group of people - already involved with the company.
Think outside the box.
Be open to alternative deal structures, which could increase the amount of money you get when it's time to sell by as much as 200 percent. The goal is to avoid feeling pressured or boxed in. Instead, find the best option for you and your company.
Business owners want to maximize their returns, especially when entering into retirement. Unrealistic expectations, however, don't help anyone. Make sure your deal provides a win/win situation for both you and the buyer.