Planning for your exit journey
Picture this: You are loading the car for your week long vacation and you have your checklist in your hand. You go through the list one more time before you back away from the house because you want to make sure you don’t leave any detail hanging as you prepare for the journey. Having spoken with many business owners over my career, I find it ironic and scary that many of them have spent so little time planning their journey out of the business when comparing to their normal daily plans or their pleasure journeys. Let’s spend some time today talking about issues that owners need to consider and how they can get help to make sure their journey out of the business is a pleasant one.
When an owner considers what he or she needs to consider as they exit, what should be on the list? Let’s start with these items on both the owner and the business side:
|Owner side||Business Side||Comments|
|How will you exit?||Am I increasing company value?|
|When will you exit?||Are financials in good shape?|
|How much $$ will you need?||What are company strengths and challenges?|
|Are co-owners in alignment with my plan?||How strong is the management team?|
|How will your payout take place?||What is the plan to grow the business?|
|How can you minimize tax impact?||What is the company worth in the open market?|
|What personal risks exist?||What business risks need to be addressed?|
|How do I treat family members?||Are there issues with company reputation and IP?|
|What is my life after exit?||Does the business have the resources to grow?|
|Can the business scale?|
|Is the company ready for sale?|
While this list looks innocent enough, the number of business owners who have addressed each issue is small. In fact, many business owners keep kicking the can down the road and many get to a place where they run out of road and wonder what to do next.
Things don’t have to happen this way and business owners of all ages and experience levels can do things now to make a difference even if they plan to stay with their firm for 10, 20 or even 30 more years. Here are a few things that each business owner should consider:
1. Be aware of others who have gone through transition and talk with them to learn what went well, what did not go well and how they would approach their transition if doing this again.
2. Build a network of peers you can draw from and share ideas with. This might be an industry group or it might be a peer group of non-competing colleagues such as with Vistage.
3. Talk with a specialist who works in the exit planning area. Finding someone who knows how to help business owners make a plan is critical and organizations such as Navix Consultants can be a good place to start.
4. Consider forming an advisory board or a formal board of directors. None of us is ever as smart as all of us when we work together for a common goal.
Planning for your vacation is important, but planning for your exit is more important. Take the time to do both and you will enjoy the journey much more.