We often talk about the importance of exit planning and setting an exit date, but there are cases in which it is better for the owner to continue with his business than to sell or otherwise transition it. Here we will discuss two reasons to stay in active leadership in your business.
Reason #1: Your Business Is More Valuable in a Risky Market
Owners who lived through the Great Recession, with the collapse of the economy in 2008 and its lingering aftermath, understand that a business that continues to make money is a better investment when the market is terribly volatile. If you risk losing money you put in the stock market because it’s unstable and you can’t earn significant interest elsewhere, it’s better to keep that value in your company and preside over that investment directly. The income from the business generates more returns than the stock or bond markets.
Reason #2: You Love What You Do
Many owners love their jobs. They love their companies. They love being a part of something they created, and they enjoy the day-to-day management of it. They don’t think there’s anything else they could be doing, including retirement, that would provide them with as much satisfaction as continuing to manage their companies. If this is you, that’s a very good reason to stay.
Now, it’s still always in the best interest of business owners to make some sort of plan in case that changes. This is particularly true for older owners who are more at risk for things beyond their control. Many of the changes exit planners advise their clients to make strengthen businesses and help them to become more profitable.
However, if an owner isn’t ready to leave, pushing him to make that decision isn’t likely to help the business. He may sabotage the sale process, costing him money for retirement or just wind up miserable without his company and resentful of the people who pushed him to sell. Neither of these is the goal of a good exit planner. Every exit should be planned to maximize all the goals of the business owner: personal, financial, career, business, and family. If the sale ignores some of those goals to focus on how much money could be made at a point in time, it’s still not a successful exit.
While it’s our job at Prometis Partners to help owners transition from owning and running their companies to whatever future goals they have for their lives, we also know that there are good reasons to stay in your business if that is what is best for you personally or financially. It’s okay to make that choice.
Exiting your company is one of the most important financial decisions you will likely make. Having more information about what the process entails, maximizing profitability, minimizing owner dependence, and figuring out what the next step in life will be like are all valuable and important parts of exit planning. We can and do help our clients with those goals every day. In the end, though, it’s up to the owner to decide when the best time to leave is. And that’s how it should be.