Most business owners count on the proceeds from the sale of their business to maintain the security of their lifestyle following their exit. Yet a study by business transition specialists, ROCG, revealed that no more than 33% of businesses actually complete the sales process and that only 42% of study participants had formal exit plans in place.
These statistics suggest a high correlation between having an exit plan and the ability to finalize the sale of your business – an event that will likely be the largest financial transaction of your life. With so much riding on having an exit strategy, why would anyone choose not to plan? There are many reasons cited, which include:
- It’s too early to plan
- Exit planning is too time consuming
- The process is too complex or intimidating
- I don’t want to deal with the associated family and employee issues
- I don’t have, or know where to find, expert advice on exit planning
If you are counting on maintaining your lifestyle after selling your business sometime in the future, resolve that 2020 will be the year you embark upon your own exit planning journey!
There’s a step-by-step process for exit planning that will neutralize the intimidation factor. You’ll be inspired as you see things fall into place and are able to envision your future, your successful exit, and the next chapter of your life.
And, your business will benefit now. When you set your exit objectives and work backwards to determine what you need to do today in order to achieve those objectives, you’ll chart a course for the success of your company – one that is often more comprehensive than most business plans – with accountability built in.
Every business owner needs an exit strategy, along with a tactical plan to put that strategy to work. Where do you start?
You likely have an idea of when you’d like to retire, sell your business, or otherwise step away and into your next adventure – or venture. Give that idea a specific exit date, write that date on a sticky note and post it where you’ll see it daily – perhaps on the door you use to leave your office at the end of the day.
As you see that date each day, it will change the way you think. A stated exit date is like a seed you’ve planted to start the wheels turning about your eventual exit. Now that you have the date, what’s next?
2020 is the perfect time to clarify your exit vision and sharpen your focus. For tips on how to do just that, read my recent blog, What Does Your Vision Look Like For the Next Chapter of Your Life? With a target date in place and a vision for the future, you’ll be motivated to jump in and start working on the specifics. Next?
Take our online Exit Planning Assessment to determine what progress you’ve made toward exit planning. Then take our Value Driver Analysis which will help determine the current value of your business and what it must be worth for you to achieve your exit planning financial objectives. Identifying your “gap” and filling it, is obviously a critical and major component of exit planning. This step will also illustrate why you need years to cultivate and protect the value of your business, and therefore, the importance of starting your exit plan now – well before that date on your sticky note.