Some research by the Commonwealth Bank in Australia showed that only 47% of small business owners have an exit strategy such as selling their business. Of those with an exit strategy, 22% intended to just close their doors and walk away. The report also said that 60% of business owners planning to close shop are still actively re-investing profits back into their business.
Not only that, the same survey report also reflected that half of these business owners are working over 50 hours every week.
Another article that showed some statistics came from smartcompany.com.au, an online business publication which published a research conducted by Pitcher Partners, an accounting firm, also based in Australia.
Pitcher Partners found that the average age of small business owners is 55 years and 81% of them plan to retire in the next ten years. However, 75% of them had no business exit strategy.
In another survey, the Cameron Research Group showed than only 10% of small business owners had a documented succession plan. Another 44% had thought about succession but had no plan and nearly half or 46% had not given any thought to succession. Only 15% of small business owners intending to exit their business in the next five years had a documented succession plan.
At one level, this is a tragedy waiting to happen. In a few years time, there will be a lot of unhappy business owners.
Sadly, it’s a tragedy already. This is a ‘problem’. There are so many people running their businesses without exit strategies laid out – and they will want to get out of it at some point, but, sadly, they don’t have a plan on how to do this.
In fact, these statistics are not only relevant to Australia. John Warrillow, author of “Built to Sell” quoted that there are approximately 23 million businesses in the United States and only a few hundred thousand are able to sell their company each year.
That means, for every small business owner who creates a business that someone will buy, there are about a hundred businesses that don’t sell.
And, this is the same business scenario for New Zealand, United Kingdom and Canada.
The way I see it, there is huge potential for a lot of sadness amongst business owners all across the world who sooner or later will want to sell their business – but may not be able to – or won’t get much for their business when they do come to sell it.
Not having an exit strategy, working more than 50 hours every week, reinvesting profits back into a business you may end up walking away from… Life on the business owner’s treadmill is not always fun, despite how it may look to others, including your employees.
Thinking that the only way out is to walk away at the end without having something as much as a salable asset… That’s extremely heartbreaking.
So, when’s the right time – or the best time – to start working on your exit strategy? If you don’t “begin with the end in mind”, at least start planning for it about two years before you want to exit.
The difference between a good business exit and a heart-breaking business exit is your choice. Your business freedom is your choice. In fact, it’s all about creating better options for better choices. But don’t leave it until it’s too late.
To know more about exit strategy visit us at My Business Freedom.
Source by Richard Keeves