A Small Business Startup Plan Should Include an Exit Strategy
You’re taking a leap of faith, working hard to see your dream of opening a small business realized. But have you thought about the future? One day, you might want to retire or illness, injury or life circumstances might mean you need to step away from your business.
To make the best exit strategy to set you and your family up to reap the rewards of your hard work, start planning your exit today before your new business opens its doors. The goals, budgets and structure you put in place now will have an impact on what happens when you sell the business or even close your doors, so plan carefully.
Here are some elements to consider.
Plan Your Timing
Take a step back from your busy startup and take a long view. Realistically, when do you want to retire? Talk to your family, your spouse and any business partners you might have. When you get to that point, how much would you like to see in earnings from the business and/or its sale? How much do you need to be comfortable in retirement?
If all of this seems like gazing into a crystal ball, it’s not. Partner with a financial planner and a business startup firm if the formula doesn’t seem clear on your own. They can recommend target earnings and savings, giving you real goals to work towards.
Plan Your Structure
The business structure you put in place today will have an impact on your startup’s future — all the way to the day you sell it. These structures and their differences can be confusing, and S corporation, C corporation, etc., may sound like alphabet soup. A professional can help you navigate the different structures and guide you to a choice that will align with your business goals.
Don’t Forget Plan B
The future is uncertain, so don’t plan on your small business as your sole means of retirement funds. The business may flop, you may have an untimely illness or injury, or it may not sell for as much as you want. Diversify your retirement savings — and get a break on your income taxes — with a retirement plan like an IRA. That way, you have something to draw on if your plans don’t pan out.
There are many other elements to a solid exit strategy, and a professional business startup firm can help you navigate them all. Risk is part of any business startup, but our team at the Numbers House can take some of the mystery out of the equation and give you firm goals to work towards. To find out more about how we can help you plan a stellar exit, call us at (865) 294-7300 or email firstname.lastname@example.org.