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,

Mack­ey