Almost eight million Baby Boomers are expected to exit their businesses in the next few years as they reach retirement age. Unfortunately, they may not fare well for three reasons:
And, there-in lies the perfect storm… With downward pressures on pricing and a low chance of completing a successful transaction, boomer business owners may be facing their biggest financial test, just as they had hoped to enjoy their “golden years.” So, what should owners do to avoid this trap? Plan, plan, plan. In fact, it’s never too early to start looking at all the factors that make businesses more attractive to buyers and in turn, drive value. The Time for Valuation is Now Maybe you’re thinking, “I’m not ready to sell.” But selling your business isn’t as easy as turning off a light switch, especially if you’re hoping to get top dollar. There are a lot of factors that need to be determined when planning the perfect sale. And, your readiness to exit is just one of them. If you’re planning to transition in 1 to 5 years, the best place to start is by verifying the value of your company in today’s market. You probably know the approximate value of your house, cars, and other important assets. Doesn’t it make sense to know the value of your greatest asset – your business? Once you know what your business is worth, you can formulate a plan to systematically improve that value and best prepare for a sale. The key is not to wait too long when your options are limited or circumstance force you into actions you regret. Ways to Sell After You Know Your Value Once you know the value, you can determine what type of sale might make the most sense. Here are several options to consider:
Bottom Line If you’re a boomer business owner who is counting on the sale of your company to fund your retirement, it’s probably a good time to get your business valuation done and start planning your exit. The market for small businesses is changing and you want to be prepared if you hope to achieve financial security for you and your family throughout retirement.