An Exit Planning Roadmap Comes with Peace of Mind
Benjamin Franklin must have had business owners in mind when he said, "Those who fail to plan, plan to fail." Every business owner knows they will eventually exit their business – it’s just a fact. It
may be years away and seem that there is plenty of time to plan and prepare – later. But time can get away and a business owner may find himself or herself ready to exit when the business is not. I’ve seen this all too often when people eventually seek out my assistance with exit planning.
One of the most important aspects of a successful business exit, transfer, or transition is achieving financial security. Without achieving that security, the business exit is a failure. After all, it will likely be the most critically important financial event of your lifetime. To avoid finding yourself in this situation, you need to know how much your business must be worth when you exit and have a plan to ensure that financial goal will be reached.
The solution for getting on track to exit your business lies in a simple action - writing it down! Once you can “see” the path – your targeted exit date, what you have today compared to your financial objectives upon exit, what you must do to address that gap and reach financial security, and how long it might take – your exit is no longer something in a distant, hypothetical future. Perhaps even more effective is a visual “map” that provides an at-a-glance overview of your current position and your progress on the exit planning journey.
We make this process simple with our Exit Planning Path Finder program. It provides that valuable visual – based on your hopes, dreams, concerns, and level of preparedness – and depicts the stages of exit planning, all the way to your planned exit date. The process of creating your Exit Planning “map” uncovers your existing state of readiness to leave your business and breaks down the milestones you need to reach along the way to arrive at the destination of exiting your business on schedule.
Developing your exit planning map involves gaining a clear understanding of the following aspects of your life and business.
- Where am I today? Looks at you and your vision, your company today, its history, and factors like annual revenue and if/how family members are involved.
- Where do I need/want to be? Defines what you as the owner must have (needs) versus your dreams and desires (wants).
- Business value assessment. Compares the business value you need to achieve your financial goals at exit versus its current value, and how many years it will take to bridge the gap based on your unique situation.
- Building business value. Develops a strategy and clear steps you will take to build business value.
- Value analysis. A formal value analysis of your business enables you to work towards your goals based on accurate data, not estimates.
- Choosing your exit path. Considers your options for transitioning out of the business and the pros and cons of each path in terms of its value in helping you achieve your ultimate goals.
- Exit path analysis. Examines strategies and action steps to address minimizing taxes, preparing the business for sale, retaining key employees, and any needs for reorganizing or restructuring.
- Business continuity and estate planning. Reviews and recommends revisions that may be needed to achieve the needs and wants you identified, including protecting your family’s wealth, and having a contingency plan in place.
- Continuity planning analysis. Assesses the benefits of continuity planning for your individual business and you as business owner and looks at concepts such as achieving the same outcome in both life and death, decision-making, family security, and perpetuation of the business.
The big picture perspective that results from the Exit Planning Path Finder assessment is invaluable in its ability to keep you on track along your exit planning journey. It is a great tool to help you and your exit planning advisor quickly recognize when a change of course is needed and what steps to take.
Contact me to learn more about getting your own Exit Planning Path Finder assessment. Imagine the confidence and peace of mind you’ll have moving forward, always knowing where you are and what you need to be doing to reach that end goal you work so hard to achieve.
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The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial professional. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial professional. This article is not intended to give
advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
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Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.