Don’t Think of It as Exit Planning

It would be interesting to have kept a list over the years of all the reasons I’ve heard from business owners for not having started an exit plan.

What it boils down to for most is that their exit is something that seems far into the future and doesn’t seem to be a huge priority. Exit planning is also perceived as something that will take a lot of time away from running their business now. Frankly, leaving their business – for whatever reason – is not something business owners want to think about. They want to focus on building their business today.

And that’s exactly as it should be. BUT if you are building your business most effectively, exit planning is a natural result.

Building your business optimally requires strategic thinking with an eye on the future. To think strategically means planning and forecasting, then acting on that strategic plan. The alternative is to simply react to whatever happens in the global economy and markets, your industry, your community’s economy, and within the walls of your own company. As former NFL coach Herm Edwards famously said, “A goal without a plan is just a dream.”

Once you identify your ultimate “destination” and when you want to arrive, you can map out the process and take the steps to get you there, with enough agility built in to adjust your route if and as needed. If you’ve done this work – surprise – you’ve also created the foundation and structure of an exit plan.

One of the most effective ways to grow your business is to develop a strategy focused on value optimization, that carries over into how the company is run. Maximizing the value of your business is also the focus of a good exit strategy and the key to accomplishing both long- and short-term goals.

Leading management consulting firm, McKinsey & Company, has developed a model for a comprehensive approach to value-based management (VBM) which identifies value as the precise metric upon which an entire organization can be built. This concept is founded on embracing value maximization as the ultimate financial objective and uses the company’s key value drivers to inform both major strategic and everyday operating decisions.

These same steps are the foundation for an exit plan. When a business owner chooses their exit date and starts to plan for their eventual departure from the business, my recommended next steps are:

  • Determine the gap between the current business value and the value needed to meet your financial objectives upon your exit.
  • Identify and prioritize company value drivers and develop a plan to address these value drivers to close the value gap.

For many business owners, a value-based management approach can empower you to reach your growth goals today, alongside your future exit objectives. By staying on top of your numbers, forecasting, and adjusting as necessary along the way, you are executing your business-building strategy, which also leads to a successful exit – however you see it.

A highly effective way to continue to move forward is to join our Exit Planning Peer Advisory Board (PAB). Our group of like-minded business owners meets every other month to focus on building their business now. In the process, they are building the future they envision for themselves, their family, and the company they will eventually step away from. It’s an invaluable opportunity to share challenges and solutions, and to help each other remain accountable to their company and themselves. You’ll meet with me, one-on-one in opposite months, to drill down and address issues that are unique to you.

Contact me for a complimentary consultation, to learn more about value-based management and exit planning, or to be a guest at our next PAB meeting.

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