Every entrepreneur dreaming of starting a small business has their own goals and motivations. Some people want to be a boss and provide employment opportunities for others in their community. They want their children or grandchildren to take over when they retire. Others simply want to be their own boss and take control of their professional future.
Whether someone wants to establish a long-standing business or hopes to sell the company to others in a few years, they will usually want to factor in those long-term goals for the company when starting the organization.
Planning for a smooth transition
Whether an entrepreneur wants to hand off the business to their children, sell it to an outside investor or close it down when they decide to retire, they can include terms in their early business plan that will make those goals more achievable.
Someone taking on a partner will want to include terms for a buyout or rules for when they sell the company to others. Those with investors will need to outline when the company may be subject to sale or liquidation to those with an interest in the company. Even sole proprietors aspiring to close the company eventually may need to integrate clear documents for when such drastic changes would be possible.
The closure of a previously-successful business can lead to legal and financial liability for the person running the company. Having the right rules and protections in place when starting the business will significantly reduce the likelihood of an owner ending up with some financial liability for the organization’s debt or challenges from their investors or partners when they are ready to sell the company or dissolve it to pursue retirement.
Thinking about what the end of one’s career might look like when forming a new company can help entrepreneurs better structure their business to facilitate long-term goals in addition to short-term gains and medium-range growth.