Business Owner Mistake #3: Not Having an Exit Plan

I see this a lot with my self-employed clients who really love what they do.  I’m the same way.  I don’t plan to retire from this five years from now.  I’m not doing this until I go public or sell the business.  I’m doing this because I enjoy it and want to help people and I don’t plan on any exit date out of the business.  I also have a lot of clients who start small businesses in their fifties or sixties, and so in a way this is sort of a retirement business in and of itself.  They’ve retired from their higher paying but higher stress and higher hours job to do something they really enjoy and want to do.  But you still need to have an exit plan.  There are two reasons you want to have an exit plan.

Reason #1:  You may change your mind. 

You may decide that you want to pursue a different interest or a different kind of business.  You may decide that you need to or want to take time off.   Perhaps you’re going to have a baby or your daughter’s going to have a baby and so you want to take off time to spend with the child. Perhaps someone in the family is sick and you need to help take care of that family member.  You may get a book deal and go on a book tour for six months.  Anything could happen and you want to make sure that you have flexibility built into your business such that you could get out and not lose all the investment of time and money that you’ve put into it.

Reason #2:  Unforeseen circumstances. 

You may become disabled or pass away.  Your business has an inherent value of all the time and energy and money you put into it.  You want to make sure that there is some way to get at least some of the value out of that business and transition it to whoever is going to handle the affairs of the business to protect your family and whomever you leave behind.  Your business affects yourself, your family, your clients, your vendors, your employees, and your independent contractors.  There are a lot of people who are dependent upon this business, such that if you either didn’t want to or were physically unable to run the business anymore, you want to make sure that there’s something set up to handle your affairs and protect everyone you care about.

Related posts

• The #1 Secret to Saving More Money: Pay Yourself First (3)
• Exit Plan: ‘Cause I guarantee you won’t live forever … (0)
• Your Exit Plan: Create Financial Freedom So You Don’t Need to Work Forever (Unless You Want To) (0)
• Top 5 Secrets Why Cash is Not Safe (0)
• Investing Secrets: You Can’t Beat the Market (but who cares?) (5)