5 Tips Small Business Owners Need to Hear About Exit Planning

This is going to be the first of many blog posts, so first off, I’ll introduce my practice and I. My name is John Peacock, and I’m a financial advisor for Wealth Intelligence. We’ve got physical locations in Columbus, GA and Zebulon, GA. We have clients all over the United States, so don’t let location bother you. While we work with a wide variety of clients, most of our clients are/were business owners. If you’re reading this, you yourself are a business owner, so this post does apply to you. At Wealth Intelligence, we believe in helping our clients plan for both their future, and their business’s future. We would be doing you a huge disservice if we didn’t put this content out there so that maybe just maybe, you’d see that you need a plan in place.

If you don't already know, exit planning is a fancy way of saying you’re preparing for the sale or transfer of your business. Only about 30% of small business owners even have a documented exit plan (Exit Planning Institute). What the heck? Why not? When I hear that I'm thinking "Do you not want to sell your business that you built from the ground up one day?"... Fortunately, if you're reading this, it means you haven't sold your business yet haha. There's still time, but the clock is ticking. Tick…. tock. Exit plans can be fairly simple, or very difficult depending on the amount of planning needed for each particular person. I won’t lie to you and say this is easy stuff, quite the opposite in fact. Exit planning and retirement planning takes a lot of deep thinking and effort.

I mean yeah, you're a small business owner so I know you're busy, but if you procrastinate on making exit plans it will come back to bite you. On the other hand, make an exit plan and you'll instantly be ahead of your peers. So, do some research and make an exit plan yourself, or you could do it the easy way and let us help you. Again, you're a busy business owner, so the easy way is awesome. When something goes wrong with my car, I have two choices: I can waste hours of my time trying to fix my car and have the possibility it still doesn't fix my problem. Alternatively, I can take it to a mechanic and happily pay him money to do a job I don't want to do…and thank them for doing it. I have no problem paying money for them to do a job I don't want to do.

That's the service we offer, we're the mechanic, your business is the car, and the problem is the fact that you don't have an exit plan. Consider it even better that we can do your retirement planning and investment management as well. Hard to beat that offer! That's like the mechanic also being able to do car details and paint jobs.

Anyways, I have to offer our services because at the end of the day we do run a business. I tell you all this because I'm confident we can add value to you as a small business owner. Again, I’d be doing you a disservice not to tell you this stuff because I truly see that we help people. I'm done with my promotion though, let's get into the 5 tips...

1) You need to have a rough idea of what your plan is as far as what you want to do with the business...sell it...pass it on to your child...close up shop...etc. The worst thing you can do is be absolutely clueless for when the time comes that you physically or mentally can’t run the business anymore. When talking to small business owners, we start by really getting to know them and getting to the bottom of their goals and fears. It’s one of our favorite parts of meeting with clients, because you learn so much about them. Everyone is different, especially business owners, and we understand that.

2) Depending on your answer above, you got some real figuring out to do. Is your business going to have the ability to sell? Does your child even want to run your business (...statistically they usually don't)? What’s the current value of your business today? What would it take for you to sell your business right at this moment? There are so many questions you need to have answered for when the time comes. The last thing you want is for your business to be sold for pennies on the dollar when you could have planned and been paid for the real value. Procrastinate and you might just be burning your retirement money away, because in many cases the business makes up 80-90% of the owner’s net worth (Forbes).

3) You have to start thinking about your time horizon. I mean how much longer do you want to ride this thing out? You get old fast...ask any old person and they'll tell you. You need to have a rough idea of your time horizon of when you want to be out of the business, be it 10 years, 30 years, or 6 months. It’s best to start planning as early as possible, but it’s never really too late. Well, if you wait until you’re incapacitated then it’s too late. Be proactive for your retirement, your family, and your legacy. Not only do we love our job because we can positively affect business owners, but also because we can have a part in affecting their family, community, and charities they support.

4) Start thinking about what kind of retirement you want. Do you want to travel, stay home, take care of grandkid? If you want a certain lifestyle, you need to plan sooner rather than later. Your income will look a lot different without the business, so you have to account for that and look for ways to supplement it. When we sit down with small business owners, we find out what they want their retirement to look like, see what the income gap is as far as what they will need for that lifestyle, and then plan ways we can close that gap in order to make the desired lifestyle attainable.

5) Start planning early because there's no benefit to procrastinating on this matter. Exit and retirement planning directly affect the lifestyle you achieve in retirement. Starting earlier = more time to plan and prepare ——-> better chance at achieving desired lifestyle. Simple as that. Don’t overcomplicate things. If you’re interested in us helping with your exit plan, call our office number: (470)745-5030 or email John@wealthintel.com, we’d be more than happy to help.