An exit or transition plan should be included in your business strategy.
Having a business strategy to succeed in a competitive business environment, regardless of the industry, is a smart thing to do. Part of that strategic plan should include how you, as an owner, plan to exit or transition your business. Unfortunately, statistics show not many are doing this. One statistic that is for sure is there is a 100% chance you will exit your business. The question is: will it be on your terms or someone else’s? Having a plan is just simply a smart business strategy. It’s about getting your business and yourself ready to take advantage of opportunities and to control the method and terms of exiting as much as possible.
If a transition plan is so important, why don’t more owners have one?
- They are so busy working in their business they forget to work on the transition plan itself. Having a business that can operate independently of the owner’s day-to-day activity is critical for making sure the business is transferrable.
- While many owners believe in the value of exit and transition planning, they don’t place a priority on it. The “I’ll get to it tomorrow” attitude works until tomorrow actually shows up in a way that forces them to deal with it. The 5 D’s – death, disability, divorce, disagreement, and disaster – often come when you least expect it. Decisions then need to be made under stress, and these limit options for owners and their families. Having an exit strategy incorporated into your overall business strategy allows owners to be prepared for these unexpected events.
- Finally, owners often start their business because they have a certain skill set or passion. Many don’t think of the business side of their endeavor, and as a result, it becomes nothing more than just an expensive hobby with little joy over time. Having an exit plan from day one creates an enterprise mindset and allows you and your team to make decisions that are geared toward making your business profitable and transferrable.
How do I get started?
To begin, start having discussions with your business partners or family members and ask yourself the following questions:
- What would my ideal exit plan look like?
- What is my timeline?
- How much do I need to harvest from my business?
- Do my personal finances allow me to live the life I am expecting after I sell?
- Do I want to help the new owner transition for a period?
- What am I going to do after I transition?
Then, look at your business like a three-legged stool – business management, personal development, and personal finances. This will allow you to determine your current baseline in each of those areas. From there, create a vision of where you want to be. The gaps between the two will be the action steps needed to help you exit when and how you wish.
You’ve spent years building your business to where it is today, and for the most part, you had a team of people and key advisors helping you along the way. As you prepare your business for exit and transition, it is important that you surround yourself with a competent team that has you and your family’s best interest in mind. Save the DIY projects for after retirement.
Transition planning, exit planning, and business readiness are just good business planning. Building a transferrable business with the end in mind allows you to be ready for those opportunities while you are growing and having an exciting adventure.
Want to learn more about Ross Business Solutions? Attend our Business Resources Event.
Join us for this complimentary event on August 22. This is the perfect small-group format to dive into topics crucial for equipping business owners for success. Our Storen Financial team members as well as guest speakers such as Gayle Ross, of Ross Business Solutions, will provide invaluable guidance on topics including business lending, succession planning, and employee retirement planning. Click here to learn more and register for this event.
Guest Blog by Chuck Ross, CEPA® – Certified Exit Planner, Business Value Accelerator, Family Advisor
Chuck Ross is a Certified Business Planner at Ross Business Solutions. The company is located in Logansport, Indiana and specializes in the three phases of business ownership – launching, growing, and exiting.
At Ross Business Solutions we understand that becoming an entrepreneur is much more than just something you do, it’s at the very core of who you are. It’s an internal passion that consumes every fiber of your being to accomplish something that’s much bigger than yourself. We understand because we’re cut from the same cloth.
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Ross Business solutions, Storen Financial and LPL Financial are separate entities.