Have you thought about what you’ll do when you retire from your interior design business? No matter what stage you are at with your business, it’s important to think about that question. How many of you have been building your business with the thought of selling it when you decide to retire? Many small business owners who are ready to retire simply close their doors. Sadly, if they had simply planned ahead they could have sold their business and added to their retirement income.
So how might you plan ahead?
As a successful business owner, you are a strategist. You set up your annual budgets and marketing plans each year – you set future goals and you plan for contingencies. That same type of strategic thinking should be directed toward your retirement. Create your vision!
Clarify your brand
Each year as you put together your marketing plan, be sure to ask yourself if you are marketing yourself or your firm. If you have established a “brand” and a “culture” it should be about the firm, not just identified with you, the owner/CEO of the firm. Whether large or small, if you create a strong team in your business, you will become known for your firm, not just for the name and identity of the owner.
A strong team also means a self-sufficient team. Create a team that isn’t dependent on you to stay focused and motivated. Make sure they know what’s in it for them. Help your team to think like owners. A self-sufficient team makes your business more appealing to buyers. For some designers it may seem challenging to give up full control and being the face of your business. Think instead of the possible ROI (return on investment) if you are willing to put aside your ego and let yourself be known for your firm, rather than your firm being known for you. Focusing instead on the firm’s brand, you will be able to have a firm that is more saleable. Being more sellable creates retirement income for you!
If you feel there are no backups for certain skills you possess, consider hiring to fill those gaps, or training certain team members in those areas. You don’t want there to be missing skills when you exit the company.
When do you plan to retire?
Remember that a good plan includes goals. And that goals are dreams with deadlines. If your future goal is to sell your business so that you can retire, set that deadline. Obviously, you can’t expect to put your business up for sale and have it sold immediately. So factor in the timing that may be involved in selling your business.
Possible internal sale
Consider if you have someone on your team with a serious interest in purchasing the business and succeeding you in your role. Plan ahead as you build your team if this is your goal.
You might want to have them purchase the business over time. Allow them to financially invest in the firm as you gradually work your way out. This will provide the opportunity to introduce them to their eventual role as CEO – allowing for a seamless transition for your team, your clients, and your vendors.
Don’t look at the exit as the end
Just because you are turning over control of your business does not mean the door has to close on your involvement with the business. You might set the contract up so that you gradually phase out of the business and then go on to be a consultant after the business is sold. But remember that you want the business to be successful without you so don’t try to micromanage!
Be sure to meet with your financial advisor
You will want to meet with your financial advisor to set a course for the time that you plan to retire. Also find someone to give you an estimate as to the value of your business. Remember your business includes the relationships you have developed over the years with vendors as well as clients and within the community. Don’t miss anything that might be of value to a buyer!
And one final suggestion: Do your homework and be prepared
Consider having a “deal team” in place before you begin to search/engage with prospective buyers – even if that buyer is a current team member. It’s to your advantage to put some distance between you and a prospective buyer. Your team might include a strong investment bank, an attorney specializing in mergers and acquisitions, and a strong CPA firm. You also might consider working with a merger and acquisition firm. Just as you advise clients on the value of working with a professional, so should you when thinking about selling your business.
Listen to our recent podcast episodes about selling your business to learn more about this topic:
Tips for Selling Your Business (Patti Julber): Get expert insights on selling your business from interior designer Patti Julber. Learn from her experience in selling her own business.
Always Be Ready to Sell Your Business (Marty Fahncke): Get insights from Marty Fahncke, a financial advisor specializing in mergers and acquisitions, on selling your interior design or architecture firm.