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An Entry Into Exit Planning
By: William J. Lynott
Posted: October 28, 2011, from the November 2011 issue of Skin Inc. magazine.
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Perhaps you’ve had your fill of the pressures, stresses and headaches that go along with carrying the entire load yourself, but can’t stand the idea of retiring completely. In that case, you may find yourself looking for a buyer willing and anxious to take advantage of your experience and knowledge. This could mean a sales agreement that includes your continued participation as a paid consultant or part-time employee.
What happens if you die?
“Although none of us likes to contemplate what would happen if we were to become disabled or die suddenly, a good exit plan will have those bases covered,” says Austin. “This could include insurance, stay-bonus plans for employees, buy/sell agreements with co-owners or friendly competitors, or other contingency planning tools.”
Also, your exit plan should include enough insurance to allow for continuation of the business, at least until your heirs or partners are able to sort everything out well enough to allow them to stay in business or arrange for a profitable sale.
Don’t etch your plan in stone
There is one characteristic common to every well thought-out business plan: flexibility. No matter how certain you are now of just how you want your exit from the business to play out, there’s a good chance that you will change some part of your thinking before that time arrives. You must be ready and willing to adapt your plan to changing circumstances.
Will you need professional help?
“Professional exit planners recognize the importance of allowing the business owner to determine the how and when of exiting,” says Austin. “A skillfully drawn plan will consider not only the financial and tax ramifications for the former owner, but also for the new owners. A good exit plan will also take the owner’s family and personal situation into account.”