Step #4: Set Goals for Exiting Your Business

Set goals

This first step to setting goals for exiting your business addresses three critical questions:

  • When do you, the CEO, want to stop working here?
  • After selling the business, how much would you like to have in the bank so you don’t ever have to work again (or worry about it)?
  • When do you want to get liquid, stop investing in this company and invest in something else?

Answering these questions identifies three important goals: the date the CEO will leave the business, a financial target and the date the shareholder will leave the business.

From our experience, the answers to questions one and three are often very different.

If you set up the right plan to exit your business, then you might avoid the problem of being carried out on a stretcher some day.  Most business owners will either sell their business or become disabled or die while still involved with the company.

Planning provides options

If you are having fun and making money there might not be any reason to make a change and retire.  If you have a succession plan in place and everyone is on the same page (including all non-involved relatives) then you might just decide to stay on until the day you pass away.

But most of the business owners we deal with have an idea in their head as to what age they will want to step away from the business and ride off into the sunset.

So how much money will you need in your saddlebags when that day comes?  It all depends on what your income needs will be at retirement.  Calculating how much money you will need to live the kind of lifestyle you want is a very important step in setting goals for the exiting of your business.

Considerations for exiting your business

Make sure you take into consideration these factors:

1)      Fair market value of the business.

2)      Deal structure or how and when will you get paid for the business

3)      The tax ramifications of the sale at fair market

4)      All other non-business sources of income and investments

If you look at all of the above factors in the same light, you will be confident that you can either retire at the desired level or you may find that you will need to work another 2, 3 or 5 years.
Either way you will be well served to think long and hard about the goals you have emotionally and economically for your eventual business exit and the retirement you and your spouse deserve.

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Posted on Feb 23, 2014

Contact Info – David Bandars

 12110 Port Grace Blvd. #201, LaVista, NE 68128