There is much to do to realize a successful business exit. BUT!!! The most challenging aspects of an owner’s exit tend to be emotional. If not faced and handled well, they can result in owner procrastination, inaction, and regret. Following are common emotional hurdles that many business owners encounter.

John was excited as “today is the day!” Twenty-five years ago this month he had started his home remodeling business with a truck and a tool belt, and today at 3pm he was going to the deal table to sell his business to a much larger remodeling company. It would be a strategic purchase for the buyer who was willing to pay a premium with a goal of expansion in the region. With the check received today, John knew he could now do everything he and Kim had thought about doing for years — travel, more time with the family and for hobby’s and other interests they both enjoyed.

The end of each year is an ideal time for a sole business owner to review and update their Business Continuity Instructions. An owner’s death or permanent incapacity often leads to the failure of a business, resulting in very difficult consequences for the family, employees, and customers. Written and distributed Business Continuity Instructions will provide those left behind with essential short-term and long-term instructions regarding the continuance of the business.

As a business owner, your company is more than just a livelihood—it becomes an extension of your identity, a vessel for your dreams, and often the center of your world. For nearly two decades, Solly’s Bagelry was my life. Co-founding and growing it into a cherished Vancouver institution brought immeasurable pride and purpose. But when I exited the business, I faced a challenge I hadn’t fully anticipated: finding my footing in a world where I was no longer "Joe from Solly’s."

As a business owner, your future exit is a significant event. That's why we publish the "Exitreadiness® Checklist" annually to assist you in planning.

A significant reliance on one or a few customers will directly impact your business's sellability. A high level of customer concentration is risky for a potential buyer who will request a customer concentration list as part of their due diligence process. A wise approach to strategically building a business that is indeed sellable and to being prepared for a future sale transaction is to create and manage a customer list as part of your ongoing business management process.

The recent Connelly v. United States Supreme Court decision provides critical insight for closely held business owners considering succession planning and tax implications.

An intellectual property (IP) audit is an important step before selling your business because it helps you identify, organize, protect, and maximize the value of your intangible assets. Intellectual property, such as trademarks, copyrights, patents, and trade secrets, can be a significant part of your business's overall value, and ensuring these assets are adequately managed is crucial to a successful sale.

Protecting the value of your business demands compliance with employment laws and prevention of employee claims and disputes.

At Lerch, Early & Brewer’s first annual Employment Law Day on September 17, 2024, employment attorney Marc Engel presented 15 cost-effective measures employers can take to improve compliance, which follow here….

An often adopted exit strategy for a founder of a small business is to sell to a group of employees who have expressed a desire to be the future owners. Factors to be considered in assessing the viability of this strategy for the selling owner(s) include their personal financial goals, risk tolerance regarding payment of sale proceeds, and the buyers' capabilities to be successful business owners. Another risk factor most often neglected is whether the employees, who may be working well together, will succeed as business partners.

Transitioning from founder mode to management team mode presents several challenges for small business owners as they plan for their eventual exit. Different leadership styles and approaches will be required as the business grows and moves from the start-up phase to a more mature stage. Here are some key challenges associated with this transition…

"I'm ready to sell and exit!" — a small business owner can arrive at that point in their thinking and emotions quickly and for many good reasons. Common reasons include retirement, health issues, a desire to do something else (e.g., travel with a spouse), or simply being burned out and tired of owning a business.

So, the business owner reaches out to a Business Broker to sell their business, but they may face some harsh realities. Even though they are "ready to sell," the Business Broker informs them that their business isn't ready to be sold as is, at least not for the $$$$ they need to get out of it. They learn that even though they have realized an excellent standard of living by doing "what seemed good" along the way, they've created a "lifestyle business" rather than building a business that would be of value to a viable buyer.

“It’s too late to turn back now.”  “We’re too swamped for that now.”  “We can probably do that ourselves.”  “It’s crazy busy around here.”  These are just a few examples of “expensive sentences” mentioned by my friend Jack Quarles in his book, Expensive Sentences, Debunking the Common Myths that Derail Decisions and Sabotage Success.

Small businesses stay small either by choice, or because they start chasing growth in the wrong places.

When you strip away the layers, it all comes down to darts.

Imagine a dart board with a bull’s eye and around it is a series of wider and wider circles. The bull’s eye is where the people just like you hang out. They are the people (or businesses) who feel the problem your company set out to solve. They are usually your first customers and raving fans.

The further you go outside of your bull’s eye, the less these prospects feel your exact pain.

Sarah thought she had a great sell strategy in place until it all blew up at the deal table. She was willing to stay on for a year or two and “earn-out” a percentage of the sale price, but she was not willing to play the role of a lender in the self-financing part of the deal, and she absolutely expected an offer of a higher sale price.

Many baby boomer business owners are thinking they "are ready" to leave their business in next 1-2 years and begin their retirement or third act in life.  With the economy growing and the number of investors seeking quality businesses to buy, many are thinking it could be an opportunity to "sell high" and accomplish their financial goals.

All business owners will need to answer these three questions at some point:

1. What is my desired date of departure or exit?

2. How much $$$$ will I need for my goals and for life after the business?

3. To whom will I sell my business?

For many business owners, the preferred answer to the third question is a sale or transfer to my child, or children, that are active in the business. In such cases, the owner would have legacy or values-based goals that would be realized with a transfer of the business to their children.

Emily has been in business for 10 years and has plateaued in both revenue and profitability. Her exit planning advisor Mary has learned that she wants to exit in 5 years and how much $$$$ she will need net of taxes in order to exit successfully. An estimate of business value has revealed that her business is worth about 50% of what it will need to be worth for Emily to head off to Hawaii in 5 years in the way she wants to.

I am a Passive Investor in the stock market – I use the “park it and forget it” approach.  Active investing seeks to outperform the market and requires paying constant attention to the market,  in order to buy and sell specific securities at just the right time to maximize your gain.

Every business owner benefits from the income they receive from their business, however, the business is not viewed as an asset.  Yet, for most business owners,  the most significant asset in their portfolio is their business and often plays an important role in the owner’s ability to retire.  The ability to sell the business for a good price is critical.