Financial Checklist for Exiting Your Business (5 tips to ensure paying yourself more)

Plan for the day when your business can run without you.

Many business owners may say that having a business exit strategy and and having succession plans are very closely related, and that usually one is a part of the other. Succession plans prepares for the future of the company without the business owner. Exiting your business is preparing the business to run without the business owner and the business owner to function without the business. A succession plan may be part of the process on how the business owner exits the business.

Do you have a business exit strategy?

For the business owner to exit the business, he/she must evaluate the financial implications. If he/she is able to sell the business, this usually represents a significant amount of income that hopefully will satisfy their retirement income. What if the business owner is unable to sell or put adequate succession plans in place? Has the business owner put enough contingency plans in place, even if it means just winding down the business? Or does that mean the business closes after the business owner is unable to work any longer? That’s a far different outcome and much different picture for the business owner. Once again, whatever the final course of the company, you will want to mitigate against the business owner being unable to retire.

Once again, time is a very important variable in how this picture turns out. Because your business affords you lots of opportunities, you need to start weighing your options early and often. The effect of a 30-year old leveraging their business for a retirement strategy versus a 50-year old even contributing two to three times the amount of the 30 year old is significant. That’s why timing is so critical. Everyone’s heard about the power of compounding but try catching up when you’re 60 and you’ll find that you’ll be working a lot longer than you anticipated.

A business legacy can only be left if there’s something self-sufficient to leave behind.

Some business owners I know brag that their business couldn’t run without them, whereas some business owners I work with make it their entire goal to make his/her role in the business a redundancy. Who do you think has a better business exit strategy? Your goal should be to plan for the day when your business can run without you. A business legacy can only be left if there is something that is self-sufficient to leave. This is the place where we want to take our customers.