Everything has to come to an end and entrepreneurial business is no exception to this fact. A businessman puts in his hard-earned money, labor and hard work to expand it multi fold from the time he started it. But through the passage of time all this comes to a halt one day for some reason or the other. He has to shift his business to some one else either by his choice or due to life changes or death. A wise business man, therefore, plans carefully before transitioning out of his business.
Here are some common reasons why transitioning out of business happens in an entrepreneur's life:
Retirement – Due to old age retirement becomes necessary to rest the body and mind. When an entrepreneur cannot work at his business any longer like he used to when he was young he must hand over his trade to either his successors or someone else to protect the business. If one has been in a particular field for too long he may choose to retire and move on to enjoy some free time with family and friends.
Monotony and other interests – So many new ventures have risen these days online and offline. A businessman with varied interests gets lured into these new ideas. Monotony of the existing trade may kindle an interest to try new ventures. In such cases certain options could be considered such as business mergers, franchising, taking on new partners or transition out of business.
Burden of Competition – Factors such as globalization, new technologies, etc. play a great part in increasing the competition between old business owners and emerging entrepreneurs. These factors pave way for a lot of stress. This in turn forces older entrepreneurs to exit their businesses.
Economic trends – Negative economic factors may lead an entrepreneur to think seriously about continuing in his profession. Recession and decline may affect the growth of an existing trade and this in turn may drive an owner to transitioning out of business.
Good offer for an existing trade – If a new entrepreneur wants to buy an existing one, it would not be a bad idea to sell it off for a good price. In fact it would be wise to grab such an opportunity. A smart owner will make a good deal and transition out of business at the right time for a good price.
Major changes in life situations – Major Life changes occurring from death, divorce and disability play a key role in transitioning out of business:
Death – Death can occur at anytime. Sudden death of a business owner, in spite of his age can cause a major distress to the family members. It is worse if they do not know anything about his business. It becomes necessary to keep a will in place as part of a good plan to meet such emergencies. Legal details, insurance policy matters, deeds and deals, etc. should all be kept in writing for the associates or successors to take the trade forward. Lack of important information and lack of interest in existing business may force the successors to opt only for transitioning out of business.
Disability – Disability could have a disastrous effect on an existing profession. A disabled proprietor must have insurance for financial support during the disability period. If disability occurs for life time then the owner may need to move out of business.
Divorce – A business is usually the main source of income in a household. When there is a divorce it disturbs the occupation along with personal and family life. Divorce tends to have a negative impact on an existing business. Various complex issues of tax and assets arise during a divorce. In some cases transition out of an existing business may become an inescapable choice for a an entrepreneur during a divorce.
Transitioning out of business is any business owner's personal decision. The above reasons are the usual ones for a business owner to exit out of business. A good strategy planned while starting a business helps in transitioning out of business in a smooth way.