Women in Business
Part 2: Entrepreneurs –
Do you have an
EXIT Strategy?
– By Ejaz Nadeem, MA, CFP, CLU
According to a recent report, 47% of Canadian business
owners are women. Women tend to make better entrepreneurs
because they are focused on the long-term outcomes, patient
by nature, and possess the ability to nurture a business and
bring it to success.
Surveys indicate that a majority of women entrepreneurs
begin their businesses because they have a passion for what
they do and have the desire to control their work environment.
For a typical female entrepreneur, starting a business is
similar to raising a baby as it takes 100% of their time, energy
and financial resources, and they get emotionally attached to
it. But they can become so focused on growing the business
that they do not consider the thought of an exit.
Can you imagine giving birth to a child
and spending many years of providing
love, shelter and financial resources only
to wake up one morning and have him/
her gone from your life?
This is exactly the feeling many women entrepreneurs
experience when they have built a business and not plan for
its future.
A business enterprise consists of tangible and intangible
assets, with a major asset being the entrepreneur herself. Other
assets include the client base, products, inventory, patents,
contracts, office buildings, furniture, equipment, intellectual
property, websites and other key employees.
These assets become worthless or lose significant value if
the owner has to exit the business without having a proper
plan in place. Hence an exit plan is also an insurance policy
that ensures the business owner doesn’t end up empty handed
when they leave the business.
A prudent exit strategy focuses on answering several key
questions:
1. What will happen to the business when the owner decides
to retire? How would the owner be compensated for the
hard work they put in to build the business? Would the
business continue as a going concern or shut down as a
result?
2. What will happen to the business if the owner has to exit the
business quickly due to a family emergency or relocation?
3. What will happen to the business if the owner suffers from
a protracted illness, injury or disability? Will it be able to
sustain itself and also continue to support the owner?
4. hat will happen to the business if the owner dies
W
prematurely? How would the surviving family members
be compensated?
There are several ways to
exit a business:
• Sale of the business to a third party
• Merger of the business with another enterprise
• Sale of the business to one or a group
of employees
• Takeover of the business by another family
member
• Sale of the assets and termination of the
business enterprise
• Shut down of the business
As you ponder on your options, you will come across some
additional questions, such as:
• Is there someone in the family who could take over from
the owner and continue to grow the business?
~ continued, pg. 20
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