Turning Your Business Into Cash: Planning an Exit

Many entrepreneurs have much of their net worth tied up in their companies. The trick is turning that into cash when it’s time to retire.

Business owners often begin thinking about Exit Planning when they start feeling that they want to do something besides go to work every day. They may prefer to be doing something else, or they simply no longer get the same kick out of doing what they do – they just don’t have the same “fire in the belly” as they once did.  They may think that it would be awesome to gain financial independence by selling the business (“cashing in”) or at least part of it (“taking money off the table”). When these thoughts grow in intensity and frequency, they may seriously think about exiting the business.

To be able to actually leave the business while maximizing their benefits from the business requires some planning – that is called Exit Planning. It is the tool that would make it possible for owners to leave the business on their terms and schedule.

However, many owners don’t want to leave the business entirely and they prefer to “semi-retire” – work less but still keep a hand in it, either as an active owner in a lesser role, or simply as an absentee owner enjoying the fruits of their entrepreneurship via a continuous reaping of the profits generated by the business.

Either way, there needs to be a plan – changes may need to be made in the leadership of the company. Or the structure may need to be set up to allow for a sale.

An exit can be accomplished by:

• Selling the business
• Leaving it to heirs
• Transferring ownership to trusted employees or others.
• Staying involved in a lesser role
• Assuming a Chairmanship role
• Being an absentee owner.

Whatever the actual exit strategy, there also needs to be a plan for what the individual business owner will do when they are no longer so active in their business.  Many owners do not set exit objectives and end up disappointed that they exited so soon, simply because they did not have a plan for their life outside of the business.

And some have trouble to separate themselves emotionally from a business they created and which has been the center of their lives for many years.

But even those who are emotionally ready to face their departure often do not know what to do or where to begin. This must be part of the exit planning.

Start thinking seriously about it. You owe it to yourself, to all stakeholders in the business, and to your loved ones, to do a plan even if you “plan to work forever.”