On October 1, 2010, Gallup released a poll which found that nearly half of all small business owners may never retire. Incredibly nearly half, 47%, of small-business owners now plan to never retire until forced to do so for health reasons — up from around 40% in 2007. Small business owners are also saying that they are planning to retire later and due to the economic crisis, fewer will retire comfortably.
Unfortunately, your business won’t be worth as much when you’re “clutching your left arm and keeling over into a mail bin,” Barbara Taylor writes in the New York Times. Today’s economic situation might look grim, but it still makes sense to plan for an exit that gets the most value from your business — and four steps can help you get started toward that goal, she writes.
According to Ms. Taylor, the action steps include:
- Get a valuation of your business today. I strongly recommend that you hire a forensic accountant (If you are in New York, I recommend Roman Motatov). With a valuation in hand, you will have a better understanding on how much your business can be sold for.
- If you haven’t already, start taking yourself out of the daily operations of the business. Depending on the nature of your business, if your business is capable of running itself without you, you should let a strong manager have more power. When you sell your business, you don’t have to be involved.
- Explore the different options for exiting your business. If you plan ahead, there are simply more choices. Contact a business broker to discuss potential buyers. Research competitors to see if they may be interested in acquiring your business. New York based SecondMarket helps buyers and sellers transact in illiquid, restricted and alternative assets.
- Keep advisers like attorneys, accountants and financial planners involved in your thought process around exit planning and retirement.
If you have any questions regarding exit planning for your small business, contact Fred Abramson at the Law Office of Frederic R. Abramson at 212-233-0666.