What happens at the intersection of business exit and retirement?

For many business owners, exit will only happen once and will involve some form of retirement.  Thinking about this group keeps me up at night.

Here’s a thought: more of an entrepreneur’s association with a business is spent on exit than on entry, even though many people start businesses without much thought to exit. The entrepreneur follows a path that many of us admire, and as a whole, startups get a lot of attention. Well deserved! Entrepreneurs assume the financial risks and if they can beat the odds of survival, will play an important role in economic ecosystems. But wait — the retiring business owner also assumes financial risks – toward exit – and he or she too plays an important role in economic ecosystems. The actions of the less celebrated, often private  endrepreneur throughout the life of the venture will affect options for exit. The exit decision is felt by stakeholders who include employees and clients. Some actions of the owner toward exit are intentional, such as succession planning and some are unintentional, such as a decision to compete on price that ends up devaluing a product line. Some exits have little lead time.

There is wide variation among endrepreneurs but as defined for purposes of this site, all will face retirement from their businesses. Exit generally falls into two broad categories of voluntary and involuntary exits. According to the S.B.A. Office of Advocacy exits range from unsuccessful (closure with losses) to successful (reaching owner’s tangible and intangible goals, with no loss). Exit of the owner can involve disposition by transfer, or else closure of the business in whole or in part. There are also different, personal definitions of successful exit.

Some founders will go on to start and exit many businesses; they are not the focus of this exploratory blog. There is a wave of business owners who are heading to retirement age — over 50 percent of owners are over age 50, and many of them answer “never retire” when asked about it in surveys (such as by the NFIB and Guardian Life Insurance). According to the US Census, business owners as a group retire about 5 years later than their employees do. For sure, business owners derive real satisfaction from ownership, and some days the answer of “never” comes from a happy place. The answer of “never” also hints at an awareness that there is a complex puzzle of moving parts that needs to be solved. An answer that is honest, smart, confident, maybe naive, it sure packs a punch. But it keeps me up at night and, maybe, now you can’t sleep either.