News

A Case for Business Succession Strategies

Posted on Nov 30, 2015

Business Succession StrategiesThere are about 28 million small businesses in the US. Did you know that 50% of the working population works in a small business?

Small businesses have generated 65% of the net new jobs since 1995. What happens when a business owner retires or exits the business? This is a serious issue since INC. Magazine estimates up to 70% of current business owners will be exiting by 2020. In 2008 the Gallup Press indicated 52% of business owners exiting by 2017. Of those 1/3 hope to sell; 1/3 want a family member to buy the business; 1/3 plan on closing and walking away.

Who does this affect most? Rural and at-risk urban communities. We have lots of examples on every main street in Grant County. Business owners aged 35-54 who get into business are getting smaller as a group. The age group for exiting, 55-74 is increasing. This is definitely a buyer’s market!

When the SBDC works with a startup business we always ask the owner to think about their exit strategy too. As it is; 80% of existing businesses have no plan on how to transition out of the business.

Transitioning a business for sale or to family members is not a quick task. Typically it takes up to 3 years to exit by sale and up to 10 years for a family succession.

So if you are thinking about exiting, it might be a good time to visit your accountant. Getting your financials in shape for a sale is important- even if it is for a family succession. To learn more click check out the SBDC website.

An exit strategy is as important as a startup business plan. But oh… the opportunities coming up!