There are a lot of people telling Business Owners what to do with their business. Accountants are telling them to reduce their tax exposure, Advisors are telling them to sell more to make more or plan for their business exit, Consultants are addressing business pain points, and Coaches are either telling them to feel good about their business or are helping owners solve their business problems themselves. All of that conflicting and competing advice and owners are confused about what to do. As a result, many Business Owners do nothing. That is, without question, the worst thing a Business Owner should do. The question remains – what should a Business Owner do?
We are experiencing significant prosperity both as a nation and in business. Business profitability is up; the economy is up, business is good. According to Market Watch, “A torrid U.S. economy blazed a 3.5% pace of growth during the summer and boosted corporate profits to the highest rate in six years, fresh government figures show.” But as some would say, “But wait, there’s more.” “Adjusted corporate earnings before taxes rose 3.4% in the third quarter. More notably, profits in the past 12 months have climbed at a heady 10.3% clip, the fastest increase since 2012.” Business is making a profit and a good profit at that. Sounds good, doesn’t it? So why the question? Are there other questions you need to ask? Is profit the only business number you need to pay attention to?
If you don’t want to plan your exit from your business then don’t. It’s that simple. However, that doesn’t mean you shouldn’t work on your business. Work on your business to make it more productive, more efficient or as I like to say, help make it recession proof. Being prepared is part of being successful at business.
With Baby Boomers owning most US Businesses it is understandable that the focus of many business consultants is to focus on helping them transition their businesses to others. Why wouldn’t they, with roughly 10 trillion dollars of business involved it only makes sense. But Baby Boomers don’t own everything, and not all Baby Boomers are thinking of retirement. We are living longer than our parents and Grandparents so staying in the business longer also makes sense. The youngest Baby Boomers are about 53. They could have another 20 or 30 years of working life left if they choose. Their businesses need to do things too.
If you don’t want to plan your exit, what should you do?
My continuing education about business, work, and the workplace recently shared an interesting piece of data with me. That data was only 20% of businesses that go on the market are sold. Further, of those business owners who sold their business, 72% did not know or did not think the sale of the business will impact their lifestyle.
Think about those two points. The average business owner has 80-90% of their personal wealth tied up in their business. About 20% of them can take physical possession of that wealth through a sale while 80% will have to find another way. What should each of these business owners do to improve those outcomes? What can they do to become part of the 20% and equally important, what can be done for the remaining 80%?
It’s a conversation most business owners and their families don’t want to have. The conversation about what happens next with the business. Next as in when the current business owner is no longer working in the business. Next, as in how do we effectively manage that transition to ensure that the investment made in the business provides the best possible return for the business owner.
So what happens next?