Lifestyle and Legacy

By: Keith Olson, Williston Center Director

Our ND SBDC network spends a great deal of time on exit and succession planning to help business owners prepare for the next act in life. Many business owners are miserable after selling their business or retiring because they have not spent enough time planning for life outside the business and may have spent a good portion of their adult life building. John Dini has developed The Exitmap software, which is used by many business owners who begin looking outside the business to determine how to start this journey. Through his many clients’ use of the Exitmap surveys, he has found that it usually boils down to two main themes that drive the exit and succession planning process.

Lifestyle vs. Legacy: What Drives Business Owners’ Exit Plans?

When business owners think about their exit strategy, two primary motivations can be differentiated: their personal future (lifestyle) or the lasting impact of their business (legacy). Let’s look at them.

Lifestyle Goals:

Financial Security: Most owners want to retire comfortably. They need enough money to support their retirement and care for their families, prompting many to consult financial advisors.

Time Freedom: Many dream of having free time. This means traveling without work emails, exploring new hobbies, dedicating time to learning, volunteering, or even caring for elderly relatives—a growing concern for many in the Baby Boomer generation.

Relocation: Some owners wish to move after exiting their business—whether for a better climate, to be closer to family, or simply to enjoy new surroundings.

Legacy Goals:

Family Succession: Many owners hope their businesses will continue in the family, either out of tradition or a desire to provide for future generations.

Community Impact: For some, their business plays a key role in the community. They might employ many residents or sponsor local events. Such owners often consider these roles when choosing a buyer.

Ethical Values: In recent years, more and more owners want to ensure that their business maintains its environmental and social values after they leave. Environment, Social, and Governance (ESG) factors have become increasingly important to some sellers. They want to ensure that the priority they place on these issues is shared by future ownership.

Business Growth: Some wish to see their business expand and innovate even after their departure, benefiting employees and the brand.

So, Lifestyle or Legacy?

While every owner has a mix of both lifestyle and legacy motives, the emphasis might differ. Lifestyle goals are often short-term and personal, like ensuring financial stability post-retirement. Legacy goals, on the other hand, look at the long-term impact, like preserving the company’s community role.

Owners prioritizing lifestyle usually emphasize financial outcomes, while those leaning towards legacy focus more on the business’s values and lasting impact.

In summary, when planning to exit a business, owners should reflect on what’s more important to them: their future (lifestyle) or the enduring impact of their business.