Jack Harwell, an exit planning advisor with the Kansas Small Business Development Center, encourages business owners to make a plan for when they're ready to leave their business.
Speaker highlights need for small businesses to plan for transition
Kansas SBDC launches program to help business owners
Feb. 8, 2021
MANHATTAN, Kan. – In the United States, an estimated 60% of private businesses are owned by Baby Boomers, those born between 1946 and 1964 – now ages 57 to 75.
According to data from the Exit Planning Institute, approximately 70% of U.S. business owners are expected to leave their business in the next 10 years. The net effect is that about $10 trillion in capital will be changing hands over the next decade.
“The market is going to be challenged to be able to handle this, and so we view that as a buyer’s market,” said Jack Harwell, a certified exit planning advisor with the Kansas Small Business Development Center.
“Owners who don’t prepare their business for sale or transition may be challenged to get what it’s worth when they retire.”
Harwell was the featured speaker Feb. 5 during K-State Research and Extension’s monthly online series, First Friday e-Calls, which helps to nurture small businesses and inspire entrepreneurship in Kansas.
He said the SBDC recently launched a program, called the Kansas Center for Business Transition, to help small business owners prepare their business for that day when they are ready to step away. Harwell cited data from 2016 indicating there were approximately 30,000 Baby Boomers who own businesses in Kansas.
“It’s an existential threat, especially in our rural communities where there are very few businesses to start, and then the prospect of losing even one of them is going to be an impact to the community,” he said.
Harwell said the Kansas SBDC currently has five professionals with training in exit planning to help the state’s business owners. They launched a website in August, 2020, that they hope will provide guidance for those that want to better understand the steps needed to plan their transition.
Their ‘Exit Planning Checklist’ includes:
- Build your team.
- Set your personal goals.
- Benchmark your business.
- Estimate the value of your business.
- Address the gaps to meeting your goals.
- Draft a transition plan.
- Develop a contingency plan.
“On the website, we are providing everyone with a base understanding of exit planning,” Harwell said. “Hopefully we have built the site so that you could build your own exit plan. But as business owners look at the materials, maybe it’s too much to tackle on their own. That’s why we’re here.”
Harwell said it is often difficult for business owners to plan for an exit strategy.
“Business owners are reluctant to ask for help,” he said. “Some of them are concerned what people might think if they know that the business owner is considering exiting.”
“But many business owners just don’t know their options; the resources to plan an exit from the business are just not available to help business owners.”
In a newer and related project, Harwell said the SBDC is discussing ways to potentially help connect rural business owners with aspiring entrepreneurs who want to move into their area, capitalizing on what is commonly referred to as ‘brain gain’ in rural areas.
Harwell’s full talk and other First Friday presentations are available online from K-State Research and Extension. Persons interested in exploring options for exit planning are encouraged to contact Harwell at email@example.com, or visit the website, https://ksbiztransition.com.