50% of Small Business Exits are Forced-What Should I Do NOW
Over 50% of small business exits do not occur on the owner’s terms due to life events including death, job injury or disability, divorce, stress, or partner disagreement. In many cases, these businesses are profitable and well established. Some of these life events are interrelated and difficult to resolve, especially partner disagreements or divorce and the related stress that results in a loss of focus that can cripple an owner’s ability to manage their business. I’ve had owners tell me that they are just tired of their business; the stress from interaction with customers and the lack of time away from it have just defeated the early passion they had when they started it.
Many small business owners are over 50 years old and have owned their business for years. Small businesses like manufacturing, retail, home service businesses, auto services, heating and air conditioning, and landscaping require a lot of physical activity and disability resulting from an on the job injury can be devastating and unpredictable. And the death, expected or unexpected, of a business owner may force the sale of the business if there isn’t a family member willing or able to take on the business.
According to a recent article from The Standard: New England’s Insurance Weekly, an agency survey found that most small businesses are underinsured or not insured at all. Owners should always carry general liability insurance and an umbrella liability policy as well. An umbrella liability policy works as a fill-in-the-gap policy, as it protects your business from areas in which your other policies will not A “Key Person” policy allows for businesses to protect against the lost revenue resulting from the death or disability of a business partner.
That is why, from the start, owners need to prepare their business and operating procedures so that the company can be run by anyone, not just them. Policy and procedure manuals, good accounting practices, along with well-trained employees is a great starting point. By preparing for something that may never happen, you can minimize the impact of unforeseen events. Preparing your business for sale before you need to sell is always a smart decision.