Can Your Business Exist Without You? Can You Exist Without Your Business?
I meet with an average of 10 business owners every week. There’s a varied cross-section of industries, size of company and expectations of growth. Each owner’s idea of success is very different, as well. The one common denominator amongst them, however, is to leave a legacy and to eventually sell the business or pass it on within their family or successor within the company.
Our company and our partners can devise all sorts of corporate tax planning strategies, funding succession plans and business contingency planning but what we can’t ensure is a smooth transition of ownership.
There are several contributing factors to this like different leadership styles, or different corporate cultures and philosophies. Still, the single largest impediment to transition is the former business owner’s ability to transition power or more importantly have the business run without them at the helm.
This creates two very contrasting and challenging questions; what would happen to the business if something were to happen to the business owner and what is the business worth without the business owner being present?
I’ve met two very different ownership types; one that is trying to do everything in his/her ability for the business to run successfully without them, the other is the owner who doesn’t want the business to be able to operate without them. Who do you think will have a more successful opportunity in selling and for a higher valuation? Who do you think has absolutely no intent in selling or won’t be considering selling their business until there are too few other options to consider?
My suggested business exit strategy for business owners is to look at the worst-case scenario; plan to wind the business down and close it. Is that a realistic scenario? Maybe not, but if all other strategies fail, you’re still in control, and you can still exit your business on your terms. If a business gets sold to a new owner, then we consider this a bonus. More importantly, the business owner isn’t looking for an eleventh-hour purchaser to allow themselves to retire. This also takes a lot of the emotion out of the valuation because your exit from the business is not predicated on you selling.
Chris Coulter is the Founder and President of The Finish Line Group. He works with business owners to leverage their businesses to increase their wealth, reduce corporate and personal taxes, create viable succession strategies and allow them to create a strategy to exit their businesses on their terms.
Chris’ passion for what he does evolve from the mistakes he made in his first business; by not diversifying his risk and not utilizing a lot of the opportunities within his business to create significant wealth. Chris found out the difficult way and now educates business owners on how to avoid many of his former oversights and to ultimately control where their finish line ends.