Exit Planning: What Baby Boomer and Millennial Business Owners Have in Common

Exit Planning: What Baby Boomer and Millennial Business Owners Have in Common

In the world of business ownership, “exit planning” is still misunderstood.

For mature business owners, the term “exit” can make them feel as though they are being rushed into retirement. For Gen X (1965-1980) and Millennial (1981 -2000) business owners, the idea of “exiting” may seem like a vague and distant event with very little impact on the day-to-day demands of owning a business.

In fact, exit planning involves much more than simply “exiting”. It is a holistic approach to maximizing the value of your business in the present, to achieve optimal value in the future when it’s time to transition or sell. Just as a baby boomer planning on retiring in the next 10-20 years needs an exit plan, so does a millennial business owner who’s just starting out.

This is especially apparent given the potential for an entrepreneurial boom in the coming years, “beginning with two of the biggest demographic forces shaping the U.S. [and Canadian] economy: the aging of boomers and the emergence of millennials into the workforce” (Kaufmann Foundation, Sixth Annual State of Entrepreneurship Address).

Millennials are expected to be the most educated and entrepreneurial generation to date; surpassing even baby boomers whose needs, desires, and ambitions have consistently stimulated the creation of numerous global industries and cultural shifts. This said, millennials also have the most student debt in history and fewer financial means than many baby boomers did when they were starting a business.

An exit plan can help to mitigate financial stress by refining the direction of your business and ensuring it runs smoothly. Amongst other things, a comprehensive financial analysis (i.e. bank fees, pay-roll, assets, inventory, processes, etc.):

  • Increases stability
  • Standardizes business processes
  • Provides a valuation of your business and,
  • Fosters team enlightenment and empowerment

As millennials increasingly join the workforce, they will continue to challenge companies to redefine what it means to work effectively, be productive, and attain success. They are likely to change careers more than previous generations and will strive to attain a work-life balance, even if it means foregoing promotions or pay increases. Some millennials may start, sell, and/or buy numerous business in their lifetimes and having an exit plan means your business is attractive, saleable, and leverageable when the next great opportunity comes knocking.

Connect with us to learn more about building your exit plan.

Exit Planning is a Journey, Not a Destination

Exit Planning is a Journey, Not a Destination

To many baby-boomers, the idea of retirement is more terrifying than it is exciting.

For the generation of entrepreneurs who invented the 50-60 hour work week, the thought of shifting away from a work-centric lifestyle can be unfathomable. Countless hours – years of your life– have been invested in growing your business and its continuation and success is significant.

In the next 10 to 20 years, the majority of baby-boomers will be ready to transfer their businesses. This will create a buyer’s market and making your business attractive will be key to a successful sale.

In other words, younger generations (Gen X and Gen Y) will have the opportunity to be very selective with where they invest their money. In his book Walking to Destiny, Christopher Snider writes, “only 2 out of 10 businesses that go to market will actually sell.”

For those business owners that expect to transfer their business to a family member, only 30% of all family-owned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with 3% of all family businesses operating at the fourth-generation level and beyond” (Joseph Astrachan, Ph.D., editor, Family Business Review).

Creating a succession or exit plan is one of the best ways to ensure you either get the best value from your business or that it continues to thrive when it comes time to start the third-act of your life. Pulling all your key advisors – lawyer, accountant and financial advisor, to name a few – together to work with a Certified Exit Planning Advisor (CEPA) will enable you to build an exit plan considering all scenarios.

Questions like “who will I be when I am no longer a business owner?” and “how do I want to spend my time in retirement?” can be intimidating enough to dissuade business-owners from establishing an exit plan. Sometimes, baby-boomers are put-off by the thought of transferring their businesses to younger generations for fear that years of hard work will be squandered by those who don’t understand their vision.

The key thing to remember is: exit-planning is a journey, not a destination. A critical aspect of establishing and running a business is also having a succession strategy in place, even if retirement is decades away.

Having an exit plan, put simply, is good business strategy. It integrates business, personal, and financial goals and works to maximize business value while also prioritizing what life after business will look like.

If you have any questions about your exit plan or how to find a Certified Exit Planning Advisor to help you make yours, connect with us.