I had an informative session with Jeremy on retirement and exit strategies for business owners. If you are a business owner and you’re wondering what retirement would look like for your business, you have come to the right place. Jeremy Harvey’s goal is to support the next generation of leaders. He is currently the Peer Group Chair with TEC Canada. Here’s what we learned.
Tell us about your journey to becoming an entrepreneur.
Jeremy started by learning marketing, buying, and selling businesses and honing those skills while in the UK; he then became a consultant, which allowed him to travel the world. Somewhere in the middle of his successful career, he realized his main goal was to help people, particularly small businesses. He eventually joined TEC Canada and started building and transforming businesses, which he still excels at in Canada. This is a unique path because it allows him to share his gift with other businesses to help them prosper.
What are business owners missing when they start deliberating about exiting their business?
Jeremy states that people are usually thinking about it too late. When business owners start, they should be forward-thinking and have an exit strategy right off the bat. It’s essential for positioning, but the main reason is that you should be thinking of building a sellable business with a good business structure that is easily adaptable or attractive to potential buyers. Business owners should begin with the end in mind. Jeremy has observed over the years that people typically ignore the ‘business’ part of starting a company and focus on the passion/skillset part. You want to build a business that can run when you are not there to allow the business to reach its full potential.
What questions should business owners ask themselves as they begin to plan for retirement or an exit?
First, they need to figure out why they are exiting. And what the plan will be moving forward. The objectives usually vary based on the individual or business type. Questions to ask should include, do I have a successor? What will I use the money from the sale to do? Will the business thrive when I leave? What’s the succession plan? Etc. Jeremy added that it is essential to set up a business that can run without you just in case you choose not to be part of the operations. Sometimes, business owners stay after a sale and essentially become employees for a period of time.
How will a business owner know if they are getting value for the business they are about to sell?
It all depends on the industry. You need a competent evaluator familiar with that industry and what your type of business will be worth in the marketplace. Jeremy gave an example of a business he consulted for that would take a certain amount from an investor. Still, after consultation with his team, they realized they were being undervalued. That consultation eventually landed them a 70% increase in valuation. Similar to having a competent real estate agent who knows the value of your property or potential value. A business consultant familiar with your business can make all the difference with a few repairs or renovations. They can get you closer to the price you want to sell by suggesting structural changes to make your business more valuable.
How can business owners determine if it’s a reasonable price, and how do they know when it’s an excellent time to sell?
Jeremy’s answer to the initial question about knowing if your business isn’t undervalued is that you will need an experienced advisor to guide you. Getting an advisor is essential because they can use their wealth of experience to compare with other industry trends/prices. In terms of timing, that is usually decided by the business owner. Still, if you do not have a definitive time, you want to wait until the market is at its peak. You have structured your business operations to thrive without you. The best strategy is to think widely and then begin to narrow it down with the help of your experienced advisor. It is important to have intellectual property and processes set in place to keep the business running successfully after you have exited or retired.
What big lesson do business owners need to learn/know about exiting or retiring from their business?
Business owners tend to go into it alone and may need to realize they can learn much from other business owners through mentorship. The critical lesson is to seek support from other business owners and professionals. As you grow your business, remember to create a plan with long-term goals rather than just thinking about where the business will be tomorrow. The main thing is to think 4/5 years ahead instead of 6 months ahead. It helps you strategize better and put the appropriate processes in place; you are likely setting yourself up for a great future valuation, business success and the opportunity to secure your retirement!
Jeremy’s work at TEC Canada involves helping small business owners achieve business success and, more importantly, life goals through peer groups. Should you need more advice, be sure to reach out to him. Jeremy can be found on LinkedIn @Jeremy Harvey.
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Remember that a successful retirement as an individual or business owner is possible if you plan and strategize based on your situation and potential life stages. We are happy to have a 30-minute conversation where we delve into a customized retirement plan for you. Please reach out to firstname.lastname@example.org.