If you are running a successful small business, it may seem strange to think about retirement. However, it’s important that you do think about what you are going to do about the business when you retire. This is because leaving this decision until the last minute can cause you problems.
For instance, you need to decide whether you want to sell the business when you retire. If this is the case, you may want to take a look at Global Resources Reviews, to see what sort of help you can get with valuing your business. Of course, you do not have to sell; you may want to hand the business over to a relative instead. However, if selling is your preferred option, you should start to think about an exit strategy as soon as possible. This is because it could have an effect on your overall retirement planning.
How retirement planning is affected by your Exit Strategy
When you are planning for your retirement, you need to make sure that you have enough cash available to pay for your lifestyle when you are no longer working.
The problem with this is that you cannot be certain of the value of your business at the time you are planning to retire. This may mean that you need some flexibility when it comes to the timing of your retirement. This, in turn, means that your retirement planning also needs to have some flexibility built-in.
How selling a business can affect the date of your retirement
If you are not intending to sell your business when you retire, then you need to make arrangements for someone to take over running the business for you. However, if you are intending to sell you need to make the best use of the liquidity.
This means that you need to sell at the right time. This may mean that you need to arrange the time and date of your retirement around the sale of your business. In order to make the date of your retirement as predictable as possible, it’s a good idea to prepare for selling well in advance. This enables you to sell at the best time, as far as the market is concerned.
This is important as the last thing you want is to be forced into a distress sale. There are several reasons why a distress sale is not ideal for a seller:
- Having to sell by a certain date means that the seller may have to accept a reduced amount from the buyer.
- There is less opportunity for the owner of a business to benefit from buoyancy in the market if they are desperate to sell.
- Potential buyers are likely to take advantage of if they sense the desperation of the seller.
You can see why having a good exit strategy, planned well in advance, is so important. It helps you to optimize the financial benefit you can get from selling your business.