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The Unividual guide to building a lifestyle with business exit planning

For those with the entrepreneurial spirit, there are loads of benefits to running your own business. One of the advantages, which is sometimes overlooked, is long-term planning that can offer you a second wind in the later stages of life. Our business exit planning guide shows some ways you can make this happen for you.

Planning for an unclear future

Starting a business is an exciting time. There is a whirlwind of options and opportunities, the possibilities are without limit and it feels like a fresh start. Your situation is totally unique to you and your new venture.

So it seems odd to start this new venture by thinking about how it will end, but business exit planning is something we’d recommend early on. Many businesses are started each year in the UK, around 113,000 in 2020, and the average age of startup founders is 40 years old.

At this age, you will ideally already have some retirement planning in place, and a business exit strategy could, if things work out, be part of that.

No matter what age you start your business, getting your finances in order early on can help bolster your business success, and reduce worry and money niggles.

“Anyone who thinks he or she can map out their future, obviously knows something I don’t!” says Emma Sinclair (entrepreneur & MBE), who started her parking businesses at 27. Emma also advocates looking after yourself. It’s sound advice, as running a business is much easier in good health.

So, it is never too early to start looking ahead. What are your plans for the scale and financial reward you are expecting? Having these clear goals will help shape your expectations for how, and when, you might exit your business.

Types of business exit

There are a limited number of ways to exit your business. Having a broad idea of which exit strategy might work best for your business is a good starting point in the business exit planning process.

  • Acquisition
  • Initial Public Offering (IPO)
  • Management buyout
  • Family succession
  • Liquidation

Selling your business is perhaps the most straightforward and commonplace idea of how you can exit your business. But it does take time and expertise to achieve. You’ll need to prepare the business for sale well ahead of your planned exit. Plus, having an experienced pair of hands in ‘mergers and acquisitions’, who can help to sell the business, may well get you a better deal.

While you might change the focus of your business over time, some options tend to only come about through strategic planning. For example, if you are planning an IPO, you’d normally include this in your business plan. Yes, you might strike gold and a business that was expected to be a small owner/manager affair could become a target for an IPO, but it’s not the norm.

Much of the UK small business sector is family run. 50% of private-sector employment is from family-run firms. If your plan is to ‘keep it in the family’ then a management buyout or family succession plan could well be the way you envision things turning out. This deceptively simple plan can come with a suite of issues. Unwilling or unknowledgeable family members can put the business in jeopardy. How you plan to split the equity of the business can also cause family members to fall out.

Discuss a business exit strategy

Eyeing the finish line

As the business (and maybe you) enter middle age, you’ll have a clearer idea of where the business can go. This clearer understanding means it’s time to fill in any blanks in the exit planning strategy and start to look at a more overarching retirement plan. Unividual have both business advisers and personal financial planners on the team, and much of what we do is this type of joined-up thinking.

Something else too could be rearing its head. As you get older, your experiences, interests, and hobbies will also have expanded. Marriage and children may now be a feature in your life.

All this change will have brought shifts in goals and priorities, and this is a natural part of your growth. Does it change your exit plan? Does it mean you need a ‘plan B’?

Time to join up your business and personal financial planning. As you’ll see in the last part of the guide, retirement is by no means the end of the story. Exiting from a business doesn’t have to coincide with never working again. It’s a period of change, of metamorphosis.

How can your business exit support the lifestyle you want to create? As the owner, you’ll be in the driving seat here so make sure to get solid advice and consider all the angles.

Keeping well-being at the heart of the matter

We mentioned at the start of the guide that looking after your own well-being is incredibly important. Not only does it make things easier going forward, but you’ll want your post-business-exit lifestyle to be free from health niggles.

Starting a business is no easy task. You’ll be making seriously taxing decisions on a daily basis. There will be long days, and there will be a fair amount of worrying to be done about the business growth, staff benefits, partners, and relationships. There will be pressure.

It’s no secret running a business can have a negative impact on mental health too. 55% of business owners say running a business has had a negative effect on their mental health.

Finding time for physical wellbeing is also tough. A run or yoga class can seem like a distant dream when working 10-hour days.

But we’d implore you to find that time to take care of yourself. Even if it’s just talking things over with a friend or trusted financial adviser, it can really help. Unividual are about more than just the numbers. We know every one of our clients has stresses and strains so we also look at how our advisers can help ease that load. Some of what we do is just listening to worries and concerns, finding ways to remove or reduce their impact. It can be a lonely road and we like to think we’re by your side when you need us.

A client's view: Advising our board for 18 years

“Unividual has provided my family with expert financial advice for over 15 years. It now also supports my business by ensuring our staff have appropriate financial advice and by advising the board on appropriate protection and insurance. The company’s other board of directors have also been advised by Unividual for approximately 18 years each.

The quality of advice has been second to none, covering a broad range of topics, from protection and investments to pensions and mortgages. It is worth specifically mentioning the recent advice I have received regarding the transfer of my Defined Benefit Pension. Unividual has helped us to navigate this complicated process by providing excellent insight. This has put my family and company in a more advantageous position for our long-term financial security.” Andy, Swindon

Start your business exit planning today

Ending with a new start

As your long planned exit nears, you might well have conflicting feelings about things. You’ve put your heart and soul into your business. But, you won’t have gotten this far without a good dose of pragmatism!

There is a growing chance that this exit might simply be a stepping stone to a new adventure. Indications are that, as the state retirement age creeps ever upwards, many people are withdrawing capital or using a business exit to fund their new lifestyle. Forget time in the garden or an around the world cruise, and think about bringing all that experience to a new venture.

If you have developed a love of fine art, or have an impressive wine cellar and want to make some additional income from your passions, then now is the time! In

Entrepreneur Richard Martin did exactly that at the age of 62. By keeping your foot on the pedal there will be a little more stress than the gardening or cruise options, but as Richard says, “It maintains a feeling of self-worth and can provide useful additional income and enhance your standard of living in retirement.”

All that hard work in your 40s and 50s may have left precious little time to indulge your passions and so now is the time. It makes sense to go with something that you already have a drive for, and that will be fun to run. John Arundel took the decision, at the age of 60, to take his love of model railways to the next level. As well as advising, “Don’t spend more on the venture than you can afford to lose,” he also recommends, “Choosing something you already know something about and have had an interest in for some time.”

Keep things simple, perhaps. Don’t aim to create a business that has loads of staff or complex manufacturing commitments in remote places. Now is the time to wind down a little and enjoy the day-to-day experiences — life’s little pleasures. Like the rest of your working life, keep a good balance between work and keeping healthy.

A solicitors-eye view: Rubric Law, Bristol

Having a plan to exit is an important aspect of any business, but one that is often overlooked. It is essential that business owners have building blocks in place for the future, which includes having a sound business exit strategy.

Shareholders should be open with each other when it comes to business exit planning. It is important to know each shareholder’s intentions. For example, is the intention to be a lifetime business owner, in which case the shareholder will want to make plans for selling the business on retirement, or do they view their shareholding as a short-term investment. One way to initiate such a conversation would be to draw up a shareholders’ agreement. This is a formal agreement between the shareholders of a company giving them a mechanism to make important decisions and provisions for exiting the company. It acts as protection for the shareholders, as well as a safeguard for their business.

In preparation for your exit, different issues need to be considered before a share sale. The timing of a sale is crucial and the shareholder will want to maximise the value of the company. A well-run company will be a far more attractive proposition for a potential buyer. The buyer will want to complete a thorough investigation of the company. This process is known as due diligence. It is therefore important to think ahead and ensure your contracts with suppliers, customers and employees are up to date, business risks are covered by insurance, the premises are in good order and any regulatory requirements are being met. Another key consideration is whether you wish to remain involved in the company following its sale. If so, you will need to consider whether you will stay on as a consultant or an employee, and there are pros and cons for each of these.

Rubric’s Corporate practice are experts in helping businesses achieve their full potential, including specialist M&A solicitors with a wealth of experience in buying and selling companies. Get in touch with Shabnam Komayli today on 01454 800008 or visit www.rubric.law

Here from Unividual's experts on business exit planning: Greg Harris and Cherie-Anne Baxter

One day you might want to retire. Yet as a business owner you face one of the biggest challenges of all – relying on the sale of a business to fund your retirement. YET, the psychology behind retirement and work is changing! Not everyone wants to “stop working” when they retire and if you love what you do, when you come to retirement, do you want the restriction of having to sell your company just to have some more freedom with your time? Listen to Unividual’s financial adviser Greg and Cherie-Anne, who were recently interviewed by Radio Bath on Business Exit Planning. They get to grips with how to build nimble finances that can be moulded around your objectives and some actionable tips around how to intertwine your personal and business finances so you can achieve your purpose in life.

Exit planning with a difference

So, as we’ve seen in this guide, exit planning starts right from the outset of your business. The difference can really be seen when you consider what you’re planning your exit for.

The days of a sedentary retirement are on their way out. We’ve seen the rise of the ‘grey pound’ and now comes the time for the ‘silver owner’.

As you go through life you’ll pass many big milestones. House, kids, retirement. Keeping a watchful eye on what feeds into your plans will help your chances of getting where you want to go. Consider getting expert financial advice and keep a connection between work and personal assets.

No matter what type of exit you plan, stay malleable around the question of how to get the best value from the business. Of course, exiting a business means you won’t take a part in its operation, but perhaps you can retain a financial link. Keep all the options on the table and have a ‘Plan B’ (maybe even a ‘C’ and ‘D’ too).

But, most of all, don’t let the adventurous spirit leave you. It might be an exit, but it’s not the end.

Plan your new beginning with us

Author: Cherie-Anne Baxter

Published: 06/11/2021

Last updated: 11/08/2021

Business Exit Strategies are not regulated by the Financial Conduct Authority.

There are useful external links in this document, when you click these links, Unividual is no longer responsible for the content.

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