Most people start businesses with an ambition to exit in order to take life easy or retire.
It puts me in mind of the old fable of the American tourist who discovers a fisherman asleep on the beach. He wakes him up and gets him to take him on what proves to be a memorable fishing trip.
So taken is he with the experience that he pitches the fisherman with an idea that they go into business together, employ all of the other fisherman and monopolise the local tourist fishing industry. Why? Asks the fisherman. Because we can sell it eventually and then you can retire to the beach and spend your days sleeping says the American before realising the irony.
The thing is that your business is probably more than just your living, it is also your environment, a kind of home from home. Your business may well be your self-actualisation(Check out Maslow’s hierarchy of needs.)
Well most people would say that the primary reasons would be to diversify risk away from a single entity and employ a capital sum in order to retire.
The thing is though that there is nothing stopping you diversifying your business interests within the business and employing a management team. Unless you can sell for a multiple of 20 on your earnings which is highly unlikely then the 5% that a wealth manager is likely to earn for you is likely to be less income than your business can earn for you.
So, why not consider selling some shares to the management and reducing your involvement to ultimately non exec whilst doing all of the things that you would do if you sold it? Ironically your input to the businesses strategy will probably improve as you increasingly work on the business rather than in it. Of course you always have the option of selling and your lack of day to day involvement together with your relaxed attitude towards a potential sale will only increase the price that you are able to ultimately get for the enterprise if indeed you do ultimately change your mind.
Many would say that tax is a good reason to sell so that they can take advantage of entrepreneurs relief but potentially your kids will be caught in the end with inheritance tax whereas the transfer of the shares could be free of tax.
Funding Nav often advises a change in strategy and ambition on the part of business owners for these reasons.