| How much time do you spend thinking about
business exit planning?
If you're like many of the small business owners we meet -
not much. That's okay as long as you don't care about supporting yourself and your family
when you retire or leave the business, and if you are not attached to what happens to the
business, your employees and your customers after you leave. But in truth, the business
professionals and small business owners we meet do care.
They care a lot - they just haven't done much about it yet.
Unfortunately, many business owners believe that their
business will just dissolve when they exit, and don't believe or understand that their
business could have value for sale.
Two Reasons Your Business Can Have Value After You Leave
the Business
1. If you setup your business so it can be sold at a later
date, then your company can help grow the acquirer's business by allowing them to add a
new service or product line to their business or by enhancing an existing service/product
line through the addition of your company.
2. If you are a thought leader in your industry and if the
business does not rely on you for operations - then your business has value as your
competition will want to remove you as a competitor!
Now, I know what you are thinking... "But, I'm not
ready to sell my business. Why do I have to think about exit planning for my business
now?"
Here's Why Exit Planning Is Critical For Your Business Now
- And Why You Should Not Delay Thinking About Exit Strategies...
An exit plan better prepares you (the business owner) for
the inevitable transition of your business - whether it's expected (intended), unexpected
or the result of undesirable circumstances that can and do arise.
Most business owners we talk to understand the voluntary
exit (even if they are not currently planning for it). And they also understand and fear
an involuntary exit. What is less discussed, but a looming reality like the proverbial
albatross around your neck, is the unexpected exit.
An unexpected exit may be triggered by a biological event
such as: * You die * You become ill or disabled * You're too old to effectively run the
business
Due to the sensitivity of the topic, many small business
owners and business professionals simply avoid the biological aspects in their exit
planning. As a result, they are left to deal with the muddle of unknowns amid the highly
emotional and sometimes financial losses of an owner.
Now That You Know Why You Need to Have An Exit Plan
in Place - Here Are Your Next Steps...
Regardless of whether the exit event is planned (the sale
of the company, leadership succession of an employee or family member) or not (a
biological event), at some point there will be an inevitable transition.
So we ask again, how much time have you spent thinking
about and formulating an exit plan that considers not only the planned exit options, but
also the unplanned exit possibilities?
To start thinking about it, we suggest you start with one
key question: Can your business continue if you could no longer run it tomorrow?
If the answer is yes - then you are well prepared for a
sale or for a biological event. If your answer is no because the business relies either
solely or primarily on you for sales and key operational activities, you are not a very
attractive acquisition target. And should a biological event occur, sustaining the
business will be a serious challenge.
Clearly, we recommend that regardless of where you are in
your business life cycle (start-up, or nearing the end of your tenure with the business),
you should be working with a business consultant to create your business exit plan.
While formulating an exit plan will require some
"frontloading" in time, the benefits of your effort will payoff by:
- Allowing you to control and better manage the exit
- Helping you to maximize company value
- Minimizing tax implications
- Establishing multiple exit options which mitigate unknowns
and negative unexpected circumstances (i.e. serious injury/disability, death, divorce,
disagreement/owner deadlock, etc.)
- Better enabling you to achieve business and personal goals
- Reducing stress and anxiety due to prior planning and
defined expectations
- Insuring business continuity
Now, start planning your exit strategy! |
