You’ve committed significant chunks of time to building your business. Some owners are so proud of their work that they plan to die running their business. Or they think they can wait until retirement to begin exit planning because they truly cannot imagine life as anything but an entrepreneur. This approach is flawed, and potentially even dangerous to the company you love so much.
You might wonder why you need to engage in exit planning if you never intend to leave. Planning for the future offers at least three key benefits, even to owners who are in for life.
Reducing Tax Liability
Whether you sell, die at your desk, or transfer ownership to an heir, lack of preparation could mean you end up owing more taxes than you anticipate. Exit planning reduces your exposure by protecting your estate. Moreover, tax laws also have a lifetime exclusion that means that most small to medium-sized business owners pay no estate taxes with the right estate planning. This critical step could save you or your heirs significant hassle and plenty of money.
Running Things the Way you Want
If you’ve done things right, you’ve build a business culture that you love, and which offers you a competitive edge, too. Perhaps you donate to charity or give back to your community. Maybe you’re planning to leave a tidy sum to a local nonprofit. Exit planning allows you make these plans a reality, and to give back however you choose. It can also prevent the culture shock that so often occurs when new owners gain access to a business. Do you want your employees to thrive even after you're gone? Then you need to plan for the future.
Boosting Growth Potential
Even if you never plan to sell, there’s no benefit to building a stagnant business. Your business should grow in value with time, and you may not be able to sustain steady growth by doing what you’ve always done. Intelligent exit planning presents new opportunities to help your company achieve more.
Many owners who are initially reluctant to engage in exit planning discover the immense value of the process. Exit planning helps you build value whether or not you intend to exit. It can also install key value drivers. These are components of your business that make it an attractive target to buyers. Even if you think you'll never sell, you don’t know what the future holds. These value drivers could one day fund your retirement. Even for owners who don’t exit, the right value drivers make ownership less stressful, more lucrative, and potentially even more fulfilling. They enable you to do what you like most, and outsource less pleasant responsibilities to others.
Whether you work until you drop, sell your company transfer ownership, or even fold it up in the end, your exit plan is a powerful tool that offers value today, as well as opportunities for real growth into the future.