For small and mid-sized business owners, exit planning sometimes seems like the last thing they want to spend their time thinking about – much less planning for. After all, it may be years away, so they’ve pushed it to the back burner.
Where do you stand?
Most business owners pride themselves on being strategic and forward-thinking – it’s just good business. And just like those smart business owners, you likely don’t run your company by waiting to see what comes up from day-to-day. Instead, you have a plan.
Truly effective strategic planning should include having something to say about how you’ll live your life once you’re ready to step away from the business so you can enjoy what’s next while providing financial security for your family and leaving the legacy you envision.
Exit planning is not as complicated or time-consuming as you might think. The most difficult part, like anything else worth pursuing, is just taking the first step! A good way to start is alongside an expert – someone who can see around corners when it comes to the exit strategy and path that’s right for you. Whether you eventually want to sell and walk away or hand over the reins of responsibility while you maintain some involvement, the path you forge in the years to come will make it attainable.
I have founded and exited a business, founded again, and – for more than four decades – guided business owners through the same processes. I help business owners navigate the twists and turns of their existing business as they prepare for the next phase. Through experience, I can see past the blind spots that often get missed by business founders, which can save them from costly mistakes, not only as they plan for their future, but when they are ready to exit.
Most hesitation and uncertainty that business owners experience about starting an exit plan disappears once they start. The first step is simple.
My initial meeting with a business owner is typically educational. It’s an opportunity to help the owner get a clear picture of what’s involved in exit planning, understand why it’s important, and tackle some common misperceptions and apprehensions. Here are some of the items we’ll discuss:
- A realistic target date for your exit
- Financial objectives for the transition and lifestyle objectives following your exit
- Options for transitioning/exiting
- Company insiders and key players
- Third-party sales of competitors, sales within the industry, and M&A options if any
- Company financial information
- Your estimate of company value and basis for the estimate
- Whether a valuation has been performed recently
- A list of trusted advisors
- Scheduling a time to meet with you at your business location and tour the facilities
Compiling this information provides a solid foundation upon which we can start to build an exit plan and lay it out piece by piece. With a little momentum, it suddenly feels manageable and much less daunting. After documenting these basics, the next step is addressing business value.
I find that most business owners don’t truly know the value of their business, which is foundational to exit planning. Knowing the value now and what the value must be to meet the financial needs of the owner when he or she leaves the company is the basis for the plan – which is all about filling that gap in valuation.
Exit planning no longer seems like a daunting task once it’s incorporated into the strategic and operational initiatives you may already be working on to build your business today. As a Certified Valuation Analyst, Certified Exit Planner, and CPA, I can help you get over the hurdles – the most difficult of which may be getting started.
Take the first step now by contacting me for a complimentary consultation. Then, you’ll be on your way towards seamlessly melding business growth and exit planning into your processes, so you can confidently and predictably create the future you envision.
Bob Zarlengo is a Certified Public Accountant in Colorado and Arizona, Certified Valuation Analyst, Certified Exit Planner, and holds the Accredited in Business Valuation credential. His four + decades of experience in public accounting and expertise in financial reporting, income and estate planning, and tax compliance fuel his passion for helping business owners achieve their exit strategy objectives. His clients describe him as a trusted advisor who becomes a friend.