What Will Happen With (What Might Be) Your Most Valuable Asset?
by Eddy R. Smith, Esq.
Certified Exit Planning Advisor
You’ve spent years logging long hours doing whatever it took to build your business into something that you’re proud of and that supports your and your employees' families. You’ve built a loyal customer base that appreciates the value you provide. You’re appreciated in the community for what you’ve created. Although they’ll never know as much or work as hard as you, the next generation of leadership is growing into their roles. After all your efforts, you’re ready . . . to flush it all down the toilet.
Baby Boomers, aged 56 to 74, own approximately two-thirds of the privately held businesses in the U.S., representing an estimated (pre-pandemic) $10 trillion of value. Whether you plan to retire or not, if you’re a Boomer owner the reality is you likely have 5-15 years remaining before you voluntarily or involuntarily cease to be the driving force of the business. Will your business survive without you? Will it thrive? Will you harvest reasonable, in some cases life-changing, wealth for yourself and your family? What will you do the first Monday you’re no longer the boss?
Consider these stats:
- Only 30% of family businesses survive through the second generation.
- Only 20% of businesses on the market actually sell.
- 75% of those who exit their businesses “profoundly regret” that decision within 12 months.
- 78% of business owners have no formal transition team, 83% have no written transition plan, and 49% have done no planning at all.
- 93% of business owners have no formal life-after-business plan.
How do you buck these depressing statistics? Plan.
Those who work simultaneously for months (at least) on the profitability, attractiveness, and sustainability of their business, what we call business succession planning; their individual and family wealth picture, commonly known as estate planning; and the questions of who they’ll be and what they’ll do when they’re no longer running their business, what I call personal “what’s next?” planning, are those who successfully transition the business to family members or employees or sell it to the right strategic or financial buyer at the right price.
Few business owners, even those heading into their late 60s and early 70s, have done much planning for their business. How much have you done? What will happen to your business, your employees, and your family’s wealth as you age out of running the show? Perhaps it is time to start. We’d be honored to help. Give us a call at 865-546-7311.
Note: The statistics in this article are taken largely from Christopher M. Snider, Walking to Destiny: 11 Actions an Owner MUST Take to Rapidly Grow Value & Unlock Wealth (2016).