Read a great article in the December 2013 issue of Entrepreneur Magazine (“Ask the Money Guy” column) that discusses the issues surrounding the prospect of selling a small business to fund retirement.
The gist of the article is that to get the most from a sale of your business, in a crowded field of business sellers over the next 15 years, you must plan and prepare now. Learning what your exit options are and assembling an advisory team to implement them is very important.
Essentially you would take the steps necessary to sell your business now, even though it may be several years before you actually put your business on the market.
This exercise allows you to:
- Understand the issues involved in a sale and be prepared to deal with them.
- Know whether the net proceeds of a sale will be sufficient to fund your retirement.
- Understand the tax ramifications of a sale and take steps to minimize the tax liability
- Take actions to increase the value of your business.
- Prepare your business for sale to make a transaction easier for both you and a buyer.
Taking these preliminary steps can give you the confidence that, when the time comes, you are prepared for a successful sale and financially prepared for retirement.