You’ve worked hard to build a thriving business to support yourself and your family. But eventually, you’ll want to slow down and step away. What are your future goals for your company? How do you envision it to run without you? These are the questions you’ll ask yourself as you plan your business exit.
It’s a good idea to have an exit strategy in place long before you’re ready to leave the company. By planning your succession, you can be strategic about every aspect of the business, ensuring everything goes smoothly. But even if your exit is more rushed, exit planning can help you secure your future income, minimize your taxes, and provide a smooth transition for everyone in the company.
Business owners spend a lot of time doing what’s best for the company and its employees. However, your business also needs to serve your financial goals. Business exit planning can help you reap the rewards from the sale of your business while knowing your vision will carry on with your successor.
Without a proper exit strategy, you will pay more in taxes than you need to. You’ll also pay more for the cost of transitioning to new owners, and you might not reach your goals and objectives for the company. When you’re strategic about succession planning, you can maximize your financial return without compromising on your objectives for the business.
Succession planning is a complex process. A big component of creating an exit strategy is using tax planning to minimize your tax burden because of the sale of the business. Even if you keep ownership of the business while hiring others to run the day-to-day operations, your succession strategy will still have tax implications.
There may be some days when you can’t wait to leave your business, but we still recommend having a proper exit plan in place. There are several advantages to planning your business exit ahead of time, including:
You’ve worked so hard to make your business what it is today. Don’t short-sell yourself by exiting the company without a plan. A strategic exit can help you better prepare for your financial future.
If your business requires you to oversee and run everything, you need to start exit planning well ahead of time. The goal is to let your business operate without your day-to-day interference. This can take 3 to 10 years, depending on your company. You can create an exit plan in a much shorter amount of time, too, if needed. We recommend speaking with one of our financial advisors about the tax implications before you leave the company.
A business exit plan can help you save money on taxes, maximize your earnings now and in the future, and create a smooth transition for the other people in the company. Without an exit plan, you might not reach your goals and objectives for the business. It’s also more difficult to reach your financial goals when you don’t plan your business exit ahead of time.
Many business owners think of their business as their retirement plan without analyzing the specifics. We recommend talking to our financial experts to find out how your business can help you during retirement. Do you plan to sell it and live off the proceeds? If so, is your business worth enough money to fund your retirement years? Or do you want to let someone else run daily operations while you receive a steady income from the company? Either way, you need an exit plan.
Exit planning is just as important as any other part of running your business, maybe even more so, because your future depends on it. We can help you maximize your earnings through business exit and succession planning. Call Upstream Investment Partners to schedule a planning session.