It can be even more complex for owner-operators.

Business owners that want to pass their business down, or keep it forever… well, they sometimes forget that financial planning aligns your intentions and your resources, whatever they are. It is not about investments, insurance, taxes, or spreadsheets… it is about wise choices.

If you are passing your business down, you want it to be in just as good of shape, as you would if you were trying to sell it strategically.
To do that, it is important to get some diagnostics from an objective outside party. Your secession, contingency, and exit preparedness plans might be fine the way they are. But are your personal, legacy, estate, tax and family plans working with your business plans… or are they grinding gears?
You wouldn’t give your daughter a car that wouldn’t go into 5th gear. You wouldn’t give your son a boat with a motor that could get him stuck in the middle of the lake, would you? Don’t give your family the same headaches you have.

If I know anything about you, it’s this… you want to take care of your family better than you have taken care of yourself. So, start exploring your options 5-10 years before you intend to exit. It usually takes about 3-5 years (not 3-5 months) to exit the most successful ways.

There are many paths that and owner might take to either retire or exit form the business. It is important to realize there are different combinations of roles. About a quarter of small business owners want to retire from operating the business, but want to keep ownership. There are also many that want to sell it and completely walk away. Some see either using it up, or selling but remaining as the operator as the right thing. 
More often a hybrid approach of multiple strategies produces the best overall outcome for the owner, the family, and the business. It all depend on your situation, your values, and your intentions.

Daniel L. Bishop CFP© CEPA©

Daniel L. Bishop is a Advice-Only Comprehensive Financial Planner that has experience in education funding from cradle to career: His deep expertise is in optimizing Late Stage College Funding into a Master Financial Plan for people with complicated situations, like business owners who are nearing retirement and need to prepare for a business exit on their own terms. He founded Black Swan Advisors LLC in 2016, so that he could pursue his passion of real, honest, financial planning advice for families. He loves working virtually with clients across the Heartland of America. Daniel and his wife modernized a century-old, lakefront farm house in southern Illinois. After work, you can often find tpaying with their 2 kids, preferably in the water.