Well, if you are approaching that age when you are thinking of retirement, then you are not alone. Actually about 1/3 of the channel partners plan to retire within the next 7 years. If you are prepared and have done well in business, then you are all set to head off to that beach. If not, it can get quite confusing and may seem like a daunting task to exit or keep on surviving in today’s channel landscape.
Assuming that you plan to retire within the next 7 years, what should you do to exit from your business?
Start by asking yourself these 4 basic questions:
1. When do you plan to retire?
2. Is the value of your business high enough to cash out between now and when you plan to retire?
3. Do you clearly know all of your business weaknesses and strengths?
4. What can you realistically do to get to where you want to go from where you are today?
If you can get pass these basic questions with honest answers, then you will probably start to see how your future retirement will unroll.
I have asked these questions many times to VARs and MSPs and the answers seem to be roughly the same. Here are some of the answers that I typically get.
Answer to “When do you plan to retire”
Roughly 3 out of 10 plan to retire within the 7 years. If they are retiring soon, then they do not really want to invest the time, energy and resources necessary to make the transition into the new channel partner business model. They prefer to ride it out for as long as they can and bank whatever money they can make. If they are not planning to retire within he next 2 years, then they may want to get on the train and invest resources to the next generation of the channel partner business model. Although there is a lot of changes happening in the business world, many of their customers are also older and still like the traditional way of doing business. For as long as that remains true, there is still a lot of business life left in this group!
Answer to “Is the value of your business high enough to cash out between now and when you plan to retire?”
Regardless if they were planning to exit or not, many realize that their business value is simply not enough to sell to make it financially worth their effort. Unfortunately most are not motivated enough to invest what it takes to improve their business. This is like the chicken and the egg scenario. The bad news is that it takes significant effort to turn a business around to increase recurring revenue, profits and value. The good news is that it’s possible if you are willing to do what it takes.
Answer to “Do you clearly know all of your business weaknesses and strengths?”
Most VARs and MSPs seem to have a fairly good idea of their weaknesses, but they really do not know how bad they are. It’s easy to say you are weak in sales or marketing, but difficult to know just how weak you really are or how to improve. Some are so weak, that the challenge to improve seems beyond their capabilities. What was interesting is that most everyone seems to concede that they do have significant weaknesses in some skills, yet when pressed, it became clear that they are not doing much to improve. A lot of clarity of your future could come from improving your best business practices! Focusing on being the best version of you is always a good thing.
Answer to “What can you realistically do to get to where you want to go from where you are today?”
The will is there, but the means is lacking. Most would like to continue in the IT Channel, but see that current profitability trends may not support that dream. There is no shortage of ideas for other things that they can do so they will all continue to survive one way or another. What surprises me, is that all of these companies have a decent customer base and is a going business concern from which they could easily build on. All they need to do is start doing more right things to become more successful. If it isn’t working with what you have been doing so far, then maybe it’s time to try something different.
Of course there are many other things to think about when planning your retirement from the channel. As we continue to work on the process for helping many exit with dignity and more cash, here is a little advice…
Think about finding a “trusted partner” to transition your customers with some sort of revenue sharing plan. It may be better than most retirement pension plans and it may actually be better than trying to sell your business.
If you want to push forward and build your business to make sustainable and predictable profits well into the future, then take a closer look at joining a peer group at VARMastermind. You need help to avoid costly mistakes and you need to get to where you want to go faster. This group can help you collaborate with other like-minded business owners to find realistic solutions. Together with the business Coaches to support and guide you, this may be the best way forward.
If you are still confused as to what to do, then start by doing something simple to help you better understand your business strengths and weaknesses by taking a business health test at Best Managed IT Companies. It’s FREE and will help you to simply find a starting point in the conversation about your future. You do need to understand your current situation in order to make the right decision about what you need to do in order to get to where you want to go.
Once you start asking yourself the right questions, you may start to find the answers.
Most of the independent research data is showing that a significant chunk of the channel will disappear over the next few years for a variety of reasons including retirement. We are already seeing the real time proof of this happening today. That said, we are also seeing many delaying their exit.
We certainly want to work with those channel partners who want to grow and we can help some who are looking to exit. We need a bigger, better, stronger and smarter channel because we make a living from the channel. We are doing our part to help as many VARs, MSPs and ITSPs to future-proof their business or exit…
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