Creating Your Sit Means Sit Legacy
Few successful entrepreneurs work without a goal to motivate their tireless efforts. For some, becoming a business owner is a means to provide for their family. For others, it’s less practical and more personal — they don’t want to answer to someone else’s orders. Still others fully intend to build a business so they can sell it for a profit.
It’s fair to say there are as many goals as there are entrepreneurs. Part of going into a business is deciding how you intend to leave your business in the long-term.
If you are 50 years or older, you need to align the fruits of any entrepreneurial effort with your retirement (though many spirited entrepreneurs intend to work until the day they stop breathing). If you want to pass your Sit Means Sit (SMS) franchise on to your heirs, plan around that eventuality. If you plan to sell the business, plan around that goal, too.
No matter what your age, medical challenges are not uncommon. Who hasn’t seen the classified ad stating, “Illness forces owner to sell . . .?” Regardless of the end game you envision for this initiative, take the necessary steps should an unfavorable twist of fate intervene on your otherwise perfect plan. Planning for contingencies is an exit strategy in itself.
Having an exit strategy when you go into any enterprise helps you focus your activities. Indeed, your exit strategy can serve as a litmus test for “opportunities” that present themselves during the course of business. For example, you could be presented the opportunity to buy out another SMS franchise owner. Doing so could significantly increase your profits without much incremental work on your part. But if your overall plan calls for something that is incongruent with such an expansion of your core business, it might not be a wise option to pursue. An exit strategy provides clarity and focus for the conduct of the business.
Not sure what you’d do when you have the inkling to pursue another business opportunity? If you have accounted for this in your overall business plan prior to going into a SMS franchise, you’d have no stress deciding on pursuing another business opportunity that presents itself. It may happen. Follow your initial intentions and you’ll face easier decisions. Why? Because your day to day work will facilitate your exit strategy (that’s the inherent value of an exit strategy).
Five exit strategy options to consider as you evaluate becoming an SMS licensee:
- Build it to sell it
- Bequeath the business at your passing
- Leverage the equity to finance additional businesses
- Maintain a stock position adequate to fund your retirement
- Use one SMS business as a springboard for eventual market dominance in this SIC category.
No matter what you do, consult a financial advisor. Disposition of the assets in any business have consequences, especially tax related. Having an exit strategy when you start the business lessens having to make reactive decisions down the road (acting from a defensive position generally tends to increase your downside consequences while increasing your exposure and risks).
Smart financial planning which embraces your exit strategy will go a long way towards achieving your business goals with a Sit Means Sit enterprise, no matter how you structure your corporation.
