As an entrepreneur, you’ve poured countless hours, resources, and energy into building your business baby. But what happens when you’re ready to move on?
Whilst selling your business may be the most obvious exit strategy, it’s not the only option.
In this blog post, I’ll show you some alternative exit strategies for entrepreneurs, from passing on the business to family members to transitioning to a new role within the company.
Why Consider Alternative Exit Strategies?
Before we dive into the different types of exit strategies, it’s important to understand why you might consider an alternative to selling your business. There are four main reasons why you might opt for a different type of exit strategy, such as:
- Personal reasons
You may be ready to retire, pursue a different career path, or simply want to take a break from the demands of running a business.
- Family considerations
If you have family members who are interested in taking over the business, passing it on to them may be a viable option.
- Financial considerations
Depending on your financial goals, selling your business baby may not be the most advantageous option, particularly if you have a lot of debt in the business, or the financial performance is not as strong as it has been in previous years.
- Strategic considerations
If you believe that your business has untapped potential or is poised for growth in a particular market, you may prefer to stay involved in some capacity. Many buyers are keen for vendors to stay in the business for some time post acquisition, and are happy to share any increases in sales and profit.
Now that we’ve established why you might consider an alternative exit strategy, let’s explore some of the most common options.
Passing on the Business to Family Members
I often come across business owners who are looking to exit their business, but are keen to ensure that any family members working in the business are looked after.
If you have children, siblings, or other family members who are interested in taking over the business, passing it on to them can be a rewarding option. Not only does it allow you to maintain some level of control over the business, but it also provides a sense of continuity and legacy.
However, it’s important to approach this option with caution. Family dynamics can be complex, and passing on a business to family members can lead to tension and conflict if not handled carefully. Here are some tips for successfully passing on your business to family members:
Start early
Ideally, you should begin developing your successor(s) as early as possible. This will give them time to learn the ropes and gain the skills and experience they need to succeed – you may need a couple of years.
Communicate clearly
It’s essential to have open and honest communication with your family members about your intentions, expectations, and any concerns you may have. This will help prevent misunderstandings and conflicts down the line.
Develop a succession plan
A succession plan is a written document that outlines how the business will be passed on to the next generation. It should include details such as who will take over the business, how the transfer will be funded, and what role you will play after the transfer.
Seek professional advice
Passing on a business to family members can be a complex process, so it’s wise to seek the advice of a professional accountant, solicitor, or business advisor who can guide you through the process.
Transitioning to a New Role Within the Company
If you’re not ready to completely step away from your business baby, but want to reduce your day-to-day involvement, transitioning to a new role within the company can be a good option. This allows you to maintain some level of control and influence while delegating more operational responsibilities to others.
Some examples of new roles you could consider include:
- Chairman or Chairwoman of the Board: In this role, you would oversee the strategic direction of the company and provide guidance and support to the CEO and other leaders.
- Advisor or Mentor: As an advisor or mentor, you would provide guidance and support to key employees or managers within the company, helping to develop their skills and prepare them for future leadership roles.
- Ambassador or Spokesperson: If you have a strong personal brand or industry expertise, you could leverage this by becoming an ambassador or spokesperson for the company
Think through each option, and how suitable it is for your needs. Selling your business can be emotionally traumatic, so it is always worth the time and consideration required to find the best option for you and your needs.