Having your cake and eating it too – Plan your transition and choose to keep working
You love running your company. Some of your friends have retired. You saw how excited they were when their retirement adventure began. You heard story after story about their golf game and their travel. But soon the glory faded, they tired of golf and wanted to be home more often. They became bored and restless with their new lives. Their experience confirms your fears. Retirement isn’t all it is cut out to be.
Besides, you love running your company. The fact is you are in good company. 78% of owners who do not plan a business transition say the reason is simple, they enjoy running their company. Nearly 6 in 10 owners do not have a specific plan for transitioning their company to the next stage of the business lifecycle.
Owning and running a business is not all or nothing. You can have your cake and eat it too. You can plan your transition and continue to work in your business. A prosperous life and a prosperous business are about choices, your choices. Planning your transition doesn’t decrease your options, it increases them.
Have you ever started planning a vacation to France and ended up traveling to Spain? That’s because it is in the planning that you discover more about what you really want. In that exploration, you open to new options. As you plan your transition, you will naturally open more possibilities. As you replace work only you can do with process, systems and the work of others, your business will increase in value. A business less reliant on you is naturally more valuable to an outside buyer. It is also a business that allows you the freedom for a month-long golf vacation, or a summer in Europe, or a month in Australia. Your options increase not decrease as you plan your exit.
There are an estimated 7 million businesses owned by Boomers, those born between 1946 and 1964. It is anticipated that as many as half, 3.5 million, will go up for sale over the next five years. Prior to COVID, it was clearly a seller’s market. At least in the short term, that has shifted. Long term valuations will return to early 2020 values for many companies that survive this recession. But for now, your business value may not be what is needed to fund your personal goals. In fact, you may be worried about just keeping your business open. For this reason alone, there is no better reason than to begin transition planning now.
A few years ago, we engaged with a long-term client to help them secure a strategic buyer. The owner had attempted multiple times to get a reasonable offer on his own. After 2 very unsatisfying courtships, the MACKEY™ team stepped in. We began by digging into the current state of the business. Based on results, it was easy to see why offers were coming in so low. We helped the business owner focus on driving the key results that we knew a strategic buyer would be looking for. We also strategically repositioned the firm in its marketplace to pivot to a more appealing customer base.
On a more personal note, as our work began, the owner had expressed his desire to continue working in the business. However, as our work progressed, the owner began to have health challenges. This redirected his thinking to a slower lifestyle. Because we were far down the road when the health challenges hit, we were able to avoid a typical decline in value that might have otherwise occurred.
Last month, this business, during the COVID economic meltdown, closed for $800,000 more than the previous offers the client had received on his own. $800,000 is no small potatoes. This amount of money can, and will, change your future.
If you are a Boomer, you are somewhere between 55 and 75. Longevity is on your side. Health gains, absent COVID, are extending life and extending the quality of life for many of us. Yet, life inevitably ends. It is entirely up to you to position your company for its future. No one else is going to do it. What will your legacy be? Will your business die along with you? Or will your careful planning ensure that the company remains viable in the long run and that your customers and employees are well taken care of.
The choice and the possibilities are yours.
To your prosperity,