Small business can serve as lucrative investment

Chris Kelleher is founder and president of The Law Firm For Businesses PC in St. Louis.

If you've lost big money in the stock market, you may be tempted to stuff what little is left into your mattress and give up the dream of being able to retire rich.

Don't despair.

For some lucky people, the stock market's recent ride down the up staircase did little to destroy their dreams of retiring early, well and rich.

What did these |quot|smarter than the average bear (or bull)|quot| people invest in?

They invested in their own businesses.

Strange as it may sound to recovering CNBC addicts and day-trading junkies, |quot|The business owner category is the largest group in the millionaire population,|quot| according to Dr. Thomas Stanley, best-selling author of |quot|The Millionaire Next Door.|quot|

Great, you might say. All I need to do is clear out what's left of my brokerage account, quit my job, start that Popsicle stand I always dreamed about and I can finally retire rich.

The statistics also show that only a few business owners become millionaires within their lifetimes.

So, the question of the day is: What's the key to building a business that can be your ticket to Millionaire Acres?

Of course, there's no single factor that can predict business success. But, after working with successful business owners, I've found that there's a key attitude, almost a mantra, that many have, which contributes greatly to the transition from a business owner to a millionaire business owner.

From day one, their business is |quot|For Sale.|quot|

No, this doesn't mean that millionaire business owners hang up a |quot|For Sale|quot| sign next to the |quot|Grand Opening|quot| sign. It does mean that successful business owners have two business plans in their heads, if not on paper.

The first business plan covers how to build a successful business. The second plan shows the business owner how to maximize his payday when he wants out of his successful businesses. This second type of business plan is called an exit strategy.

But, you might ask, why should I worry about planning an exit strategy before my business becomes fabulously successful?

There are two reasons.

First, planning your exit strategy in advance forces you to focus on your business's ultimate goal (your ultimate payday) which, in turn, makes all other planning and decision making much easier.

Second, by proactively choosing a good exit strategy, you avoid getting stuck with one of the |quot|Loser's Exit Strategies|quot| such as: death, disability, default, divorce, terminal family warfare, mutually assisted |quot|partnercide|quot| or, in some cases, |quot|The Attack Of The Killer B's|quot| (Burnout, aBandon the Business and Become a Beach Bum).

If you want to retire rich and you don't want to face those Killer B's, here are a few of the many examples of good exit strategies.

|quot|By 2006, my business will be able to hum without me being there and I will generate $350,000 a year in cash so I can move to the Caribbean and treat my company as a passive investment.|quot|

|quot|I will transfer the business to able family members in a planned and orderly fashion over the next 10 years for a total buyout price of $2 million.|quot|

|quot|Since my family hates the business, in five years I will transfer the business to employees or management in a planned and orderly fashion for a total buyout price of $7 million.|quot|

|quot|After I hit $3 million in sales, I will sell the business to a local buyer for five times net cash flow.|quot|

|quot|When I buy my 10th Taco Tico franchise and during the next consolidation frenzy, I'll put my package on the market to sell to a national or regional investment concern for seven times cash flow.|quot|

|quot|If I die or am disabled, then the contracts that I already have with my trusted executives Sue, Joe and Donna require them to run the company for at least two years. They have an option to buy the company at any time for $7 million or, if they decline, they will be paid a substantial performance bonus if the company is ultimately sold for more than $8 million.|quot|

As can be seen from these examples, some of the keys to great a exit strategy are: be creative but not crazy about who might buy your company; set realistic milestones and time deadlines to achieve your goals; and be definite about what you want your ultimate payday to be.

Another bit of advice: Exit strategies are not |quot|do it yourself|quot| weekend projects.

Developing a strategy that is right for your business and meets your financial and personal goals requires time, attention and input from trusted business advisers.