When Closing the Doors is a Bad Idea

My social media feed buzzed with a landmark restaurant at the beach closing because the owner wanted to retire after 30 years. It made me sad, too, but for different reasons.

My lifeblood is working with small businesses in all stages of the business. For my clients, their business comprises a disproportionate share of their assets, and their quality of life and retirement is tied to the success of their business.

When small business owners decide just to close, they lose the opportunity to reap the benefits of all their hard work over the past 30 years. Instead, he could have sold the business as a going concern, the hard assets or the name and goodwill (the trademark) to make retirement that much easier.

The time to plan this is at least five years before you want to sell. You want to try to sell at the peak of your business success. You want to have systems in place so the knowledge of how to successfully operate the business is not in your head alone. You want to identify children or employees who have the ability to take over, and you want time to train them.

If you are going to sell to third parties, you want to make sure you have processes and you will restate your financials to show the total amount of income from the business when you take out all the legal perks you use to defray taxes (company cars, officer salaries, insurance payments, etc). This is where a CPA and a business broker are invaluable.

Don’t leave money on the table by just closing your small business. Plan your exit.