Do you have an exit strategy for your business, or do you plan to just work until you die? That might sound funny or cynical, but it is something that is usually not planned or thought out. As business owners and entrepreneurs, our retirement is not just the extra cash we make, but the value of the business we build.
So how do you do both--take cash out of your business to pay yourself, and keep enough cash in the business to build value by investing in your company?
Unfortunately, there is no right formula, exact science, or easy answer. The only thing I can tell you is this: start planning.
The main thing to remember here is that you must expand. If your business isn't growing, it's shrinking. You don't have to be aggressive--you just need to grow year over year in customer base, sales, employees, and (of course) profit. If you don't grow, you'll never find yourself in a position to walk away.
Once you are in position to exit, you have a few options. You can sell to a competitor, be a part of a roll-up to an investor, or--the one I like the best--hand over the business to one of your employees. When you take really good care of your employees, teach them the business, and they give you 20 or more years of their life and career, what better reward can you give them but a shot at ownership? Take back paper, and give them 5 years to grow the business. They can get a business loan to pay you off with a balloon payment, or accelerate the interest rate, which will motivate them to pay you off.
Again, the key is to keep growing your business. Maintain good relations with your competitors. Support and grow your employees. Take those calls from folks who may be looking to do a roll-up.
Got questions about this or anything else? Drop me a line--I'm happy to talk.