Starting a small business is challenging, but exiting can be even harder. As many small business owners approach retirement, effective exit planning becomes crucial. Recent data indicates that over 51% of small business owners are over the age of 55, with many planning to retire in their 60s [fa866b6b]. This demographic shift highlights the importance of early succession planning, as demonstrated by Mike Roach, who co-owned Paloma Clothing since 1975 and began his succession planning at the age of 74 [fa866b6b].
Common exit strategies for small business owners include developing succession plans, selling the business to outsiders, or closing it altogether. Taylor Trapani, who took over Trapani Communications in January 2024, exemplifies the importance of preparation, having spent five years planning for the transition [fa866b6b].
Transparency during these transitions is essential. Open communication with employees and clients helps to maintain trust and ensures a smoother handover process [fa866b6b]. Financial advisors can play a pivotal role in this planning, especially as many business owners express concerns about their retirement timelines and the state of the economy. In fact, 72% of business owners over 60 rate the U.S. economy as 'poor' or 'fair', with 36% postponing their retirement plans due to inflation concerns [45a77f1c].
Despite the pressing need for financial guidance, only 45% of business owners currently work with an advisor. However, a shift is occurring, with 65% planning to consult an advisor within the next six months [45a77f1c]. This presents a significant opportunity for financial advisors to assist business owners in navigating their exit strategies and ensuring a secure retirement.