By Emilia DiMenco
An inheritance, a great stock, or property investments are surefire ways people have acquired wealth, but there’s another proven approach to wealth-building: entrepreneurship.
Historically, women who started a business rarely viewed their enterprise as a big money-maker. The goal was to enjoy the flexibility and freedom that comes from calling your own shots while earning an ample salary, building savings, and ultimately transferring or liquidating the business. Indeed, that is one path to financial freedom.
Another option—one where women and men have made millions—is to expand the company strategically, then monetize the value by selling ownership of the business to someone else such as family members, employees, or even competitors. If you think your goal might be to sell the business at a huge profit, here are some things to consider.
• As your company grows, so do your opportunities for selling it. A sellable business must have stand-alone value. The more integrated your business is with your personal identity and finances, the harder it will be to sell. Instead of making financial decisions that primarily benefit you, take steps to separate your personal finances and identity from that of the business, handling taxes and expenses in a way to build cash flow and solid assets.
• Think carefully about how you want to expand. To grow, you must use critical thinking and strategic skills to create a vision and make it a reality. Some of the ways you can expand your company are adding new locations, franchising, exporting, licensing your product, forming an alliance, and winning large corporate or government contracts. You’ll also need to incorporate the right technologies to increase business efficiencies and maintain competitiveness in your industry.
• Devise a plan for your exit. Think of your exit as another business strategy that requires tactics and measurable outcomes. Don’t shy away from succession planning because it seems eons away. Devise a formal plan that identifies the prospective buyer, the right training program for your successor, a timetable, and your role during and after the transition of leadership.
• Build a team of experts to help you. When you sell a business, you are selling a promise. The new owner will be less concerned with what you have built and more concerned with what she can build on. To prepare, begin assembling a team of professionals—lawyers, accountants, and consultants—to perform tasks such as identifying the right legal structure for growth and bringing your financial reports in line with accounting standards. You need a team you can trust to provide practical direction and deliver peace of mind that comes from knowing your business is in reliable hands.
Most women owners think of the business as their baby, and selling or closing it is unimaginable. But it’s never too soon to start planning for the day when you transfer or sell the business and prepare for the next step in life. It will happen and sooner than you expect.
Emilia DiMenco is president and CEO of the Women’s Business Development Center,an organization that provides services to prospective, emerging, and established women business owners, including workshops, business counseling, a Women’s Business Enterprise (WBE) certification and procurement program, and annual events including the Entrepreneurial Woman’s Conference and an Early Childhood Education Entrepreneurship Expo. Through a pool of more than $1.6 million in funds, the WBDC offers business loans of up to $75,000 to qualified women entrepreneurs. In September 2015, DiMenco also was named to the Mayor’s Small Business Advisory Council. For more information, visit www.wbdc.org.