Knowing When to Leave Your Business Behind
The Lark Quartet recently announced that after 34 years, it would disband at the end of its 2018/19 season. Over its 34 year existence, it has performed in many of world’s most famous concert halls and recorded more than a dozen albums. The Lark has had residencies throughout the world.
But the Lark is more than a string quartet. It has commissioned music from living composers, thereby adding to the string quartet repertoire. And the Lark has engaged in community outreach by providing free family concerts with a goal of exposing children to chamber music. But what may be most remarkable about the Lark is that although its members have come and gone over the years, it is, and always has been, entirely comprised of women.
The original members of the Lark entered the music profession when the major string quartets were mostly male. I had the good fortune to have performed in orchestras with two of those incredible women and know what they faced. They made it to the international stage not because they were women, but because of their dedication and musicianship.
These aren’t the first Lark members who decided to move on to new challenges. Being in a quartet is hard work and requires a lot of travel–always with the same companions–which can be exhausting. Orchestra positions and college professorships offer less travel and a more regular income, which can be appealing after living out of suitcases for years.
The original members moved on to new professional challenges years ago, but their positions were filled with different musicians, and the Lark continued. After 34 years, some of the positions have been replaced multiple times.
Yet, for reasons they have not communicated publicly, the current Lark members have chosen to disband instead of finding replacements like their predecessors have done. One can speculate that it might be because in this culture of #metoo, an all-woman quartet might no longer be relevant. But the Lark’s contributions to the chamber music repertoire and community outreach continue to be meaningful and relevant.
Each Lark member may have her own reason for moving on and goals for her life after Lark. Collectively, they likely have their reasons for deciding to disband, rather than passing the batons (or bows) to another generation.
Like the Lark Quartet, business owners may decide to sell, transfer, or close their businesses. Business owners, also, have different goals and motivations for these decisions. This article explores reasons why business owners might decide to leave their companies–and how they might accomplish their goals in doing so.
Choosing Among Sudden Death, Evolution, or Extinction
When one hears that a business is shutting down, the immediate conclusion is that the business was in financial difficulty and is in the red. Frequently, this type of business cessation includes dissolution of the business entity and possibly, bankruptcy or other debt relief proceedings.
Other times, the business may be in the black, but it does not generate sufficient income to satisfy the owners’ needs. Faced with a choice of getting another part-time job or closing the business in favor of full-time work, the owner may choose to close down the business.
Other times, a business may reach a watershed moment when it must move in a new direction or face extinction. Some businesses may use this as an opportunity to evolve, while others may allow themselves to become extinct. Which decision is best will depend upon the business owners’ goals.
For instance, Netflix began in 1997 as a mail-order DVD rental/subscription program. As movie streaming started to replace DVD rentals, Netflix dove headfirst into the video on demand business. Netflix continued to evolve, becoming a pioneer in creating original content.
Also in 1997, Palm was formed and became a pioneer in the handheld personal device industry. By 2002, BlackBerry had come out with a handheld personal device which combined a phone and pushed email with features similar to those offered by Palm. Palm chose to stick with what it knew best and not to move into the cell phone space. Five years later, Apple announced the iPhone, which would come to dominate the smartphone industry. By 2011, Palm was no more.
How and When to Transfer the Reins
Some business owners may decide to call it quits while business is still good and before reaching a watershed which forces them to choose evolution or extinction. This can be a viable option for different business reasons.
Sometimes, those business owners are entrepreneurs who formed their business with the hope they eventually will be able to sell it for a huge profit. Others may not have started with the intention of selling but receive an offer too good to refuse. And others yet may simply be want to retire or to move on to new challenges and maximize their return while their business still is doing well.
Consider YouTube, which in early 2005 was started by three PayPal employees to share videos. Within months they obtained angel financing, indicating the hope was fast growth and sale. YouTube’s popularity increased exponentially in 2006, and by November, the owners had sold YouTube for $1.65 billion in stock.
Contrast that with Jade Billows, a highly popular Chinese restaurant in my local shopping mall for more than 20 years. The food was good, the dining room was full, and the front counter was covered with bags of carry out. It was family-run business with owners who were aging, but far from old. Yet, to the sadness of many in the community, the owners announced they were closing the restaurant. Their reason? They wanted their lives “to be colorful and not only restaurants.”
The business’ succession plan (or lack thereof) also can aid in decision-making. For a family-owned business, ability and willingness of the next generation to take the reins upon the owner’s retirement are key factors in determining whether to continue, sell, or close a business.
My father had a college friend (who I will call Virgil) who owned a successful retail business, which he had inherited from his father before him. When Virgil’s son (whom I will call Jordan) graduated from college, he joined the business. Jordon spent several year working by his father’s side and was from all appearances very good at the business and prepared to take over when Virgil retired.
When Jordan decided that another career was more in line with his long-term goals, Virgil was forced to change his plans. Rather than sell the business, Virgil decided to limit his business hours. When his health declined, he closed the business.
How to Decide When to Leave
Leaving one’s business is a personal decision. Timing is key, and many times, there is no objectively right or wrong decision.
Business owners should ask themselves the following questions to help themselves decide what is best for both the businesses and the owners in both the short- and the long-run:
Do I have (or can I obtain) the financial wherewithal to continue this business? If so, for how long? A business that has no way of every paying off debt may have no choice but to shut its doors.
Where do I see the industry in five years? If the industry is changing, do I have (or can I obtain) the financial wherewithal to enable the business to evolve with its industry? If a business cannot afford to evolve, the owner may have little choice but to sell it to someone who can support that evolution or to allow the business to crawl to extinction.
Where do I see the business in five years and 10 years? Where do I see myself in five years and 10 years? Are those visions consistent with each other? If the business and owner have different long-term goals, it may be time to transition ownership of the business to an owner whose goals are closer to those of the business.
What is the business’ succession plan? Is there someone who is able and willing to take over the business? If, as with Virgil, there is no “heir apparent,” then selling the business to a new owner or closing of the business altogether may be the only options when the owner is ready to leave.
With regular check-ups about these questions owners should be able to make conscious decisions which best meet the owner’s goals and the business’ financial and industry realities.
© 2018 by Elizabeth A. Whitman
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