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Entrepreneurs and business owner-managers all reach the same dilemma one day: what happens when a better opportunity comes along, or when they want to leave the companies they’ve built, and retire on the profits? How will their businesses survive without them, and how can they get the best from the huge effort they’ve invested with building a firm from scratch?
Yet while it’s the same issue every time – ‘How should I exit my company?’ – the unfortunate reality is that most business owners don’t have any idea as to how to go about succession planning, beyond finding someone they might like to take over from them. That may (or may not) cover the personnel issue, but it doesn’t go close to dealing with the financial and legal imperatives associated with handover. And they don’t have the time to seek out the right individuals to help with the process, either.
In fact, most business owners and entrepreneurs find the task so daunting they just close the doors of their businesses and walk away.
A Commonwealth Bank report in 2008 noted that nearly half of all business owners don’t have an exit strategy at all, and even among business owners who do have an exit strategy, 22% still just walk away. When you consider that the average business owner works upwards of 50 hours a week for 10 years to get to the point where they want to exit, that’s an extraordinary waste of business potential.
Whether selling a business, transferring a business, or taking over a new business, it’s vital to ensure that those who have invested their time and energies into a business get the best from the companies they’ve built, and that a plan for growth is in place. But how to execute the exit?
A management consultancy agency can do all the work for you, but at a minimum $1540/day (nearly $30K/month) for an entry-level (read: inexperienced) consultant, and with some months of work to do for an exit to be properly planned, this can be an expensive exercise indeed.
There are DIY tools out there, with most banks and wealth management organisations having guides to exiting a business, but these are often narrow, piecemeal offerings, and don’t always suit the unique needs of individual businesses.
No wonder so many entrepreneurs find it easier to walk away.
