Entrepreneurs developing a plan of transition and succession for their businesses was discussed at the most recent KPEDD Industry Outlook Forum. Jon Bittner, Executive Director of the Alaska Small Business and Development Center was the featured speaker leading off the discussion on why businesses don’t want to create a succession plan and why exit planning is so important.
Bittner said:
“One of the trends that we have noticed is there has been a movement. It started pre-COVID of people exiting their businesses or trying to exit their businesses, but the last three years have really accelerated this process that we’re seeing way more people interested in trying to pass their business onto the next generation, to sell their business and retire, do a lot of things. While that’s great, that’s the end game, right? You don’t want to work until you die, that doesn’t make any sense. You want to be able to sell your business, you want to be able to retire and move on to whatever anyone else does when they retire. They’re discovering that it’s not like selling a used car. You can’t just put it up on Craigslist and, sweet we got the deal we were looking for, everything’s hunky dory. You can’t just wake up tomorrow or today and decide I’m going to sell my business and the next week you’ve got a deal in the works and it’s all a done deal. This takes time. It takes planning. It takes preparation. That’s the part that gets a lot of people squirrelled out.”
Experts believe, according to the presentation, that a surge of business sales is coming. Baby boomers own 12 million businesses in the U.S., which represents 40% of all businesses and 25 million employees. These business owners have been retiring at a record rate that is only projected to increase. Bittner says that 70% of the businesses they own will change hands in the next 10-15 years, some to fellow baby boomers.
Developing a good exit plan includes setting goals, documenting objectives, determining how to transfer control, and integrate long-term financial goals.
Click here for the PowerPoint and here to watch the presentation.
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This feature is part of a continuing series by KSRM News highlighting KPEDD’s 2022 Industry Outlook Forum.