EXIT PLANNING – Begin with the End in Mind.
This advice is equally relevant for a business in the startup phase of the business life cycle as well as for the mature business approaching an ownership transition point.
Stephen R. Covey offered fascinating perspectives in his 1989 book 7 Habits of Highly Effective People. That book became a best seller, and has been cited innumerable times by experts from all walks of life. Most recently, I’ve been revisiting Habit #2 – BEGIN WITH THE END IN MIND.
Habit 2 asks “So, what do you want to be when you grow up?” It develops that simple question, ultimately offering the following perspective: “Beginning each day with the End in Mind means to begin each day, task, or project with a clear vision of your desired direction and destination, and then continue by flexing your proactive muscles to make things happen.”
I can hear you now – why is this exit advisor asking a question that you typically pose to a 5-year-old? Too often business owners do not have a clear vision of their END goal. They find their end goal has become a bit blurry over the years as circumstances and family dynamics evolved and changed. Too often, the entrepreneur loses his/her own identity as a person separate and distinct from the company they’ve given a lifetime to grow and nurture. What results from this blurriness, this merge of corporate and personal identities? Unfortunately, very often the result is a business that is floating without a clear direction or goal; and a business owner who is financially and psychologically unprepared for the inevitable move to another phase of life.
Why Many Business Owners are Unhappy Following an Exit
Studies indicate that 75% of business owners who have exited their businesses are profoundly unhappy within one year following the exit. Why is that? A few reasons have emerged, including:
- The company was undervalued, leaving hard-earned wealth on the table;
- The seller paid too much in capital gain or estate taxes
- The seller failed to realize their personal, financial, or business goals during the process.
Develop a Succession Plan Before You are Ready to Exit Your Business
Our message to business owners is simple: Don’t be another unhappy statistic. Begin today to develop that plan for your inevitable exit, keeping the end in mind. To effectively accomplish this requires a vision that is cohesively integrated with planning that leaves both you and your business on sound footing. To avoid seller remorse, the owner needs a clear vision of life post-ownership, and a plan to make that vision a reality. For peace of both mind and conscience, the plan must integrate the needs of all the stakeholders that are ultimately impacted by this process, both family members and business associates/employees. Keeping an eye on the plan will provide necessary focus so that the owner and the company are both ready whenever that exit point arrives, be it planned or unplanned.
Our Exit Planning Advisor Group understands the wide array of issues that must be addressed in an effective exit plan for a private business owner. We employ a process that addresses the myriad of decision points in a structured, measurable format. Call us at 630-420-1360 to learn more about how we can help you plan for the future.