It has been reported that fewer than 20% of business owners have an "Exit Plan" in place - even though having one can enhance the ultimate value of a business more than solid earnings alone.
Some owners are put off by the term "Exit Planning", since they are actually not ready to exit. We prefer to call it "ENDURANCE PLANNING", since the process is really about building endurance in each of three areas:
- Endurance of your business, so it will be able to remain sustainable after your departure...whether that happens by choice or by circumstance.
- Endurance of your investment in your business, be that your time and energy or the earnings retained to help it grow. This means protecting that investment from potential losses and preserving it by minimizing the taxes that will be due within the law on its transfer.
- Endurance of your personal fulfillment if and when you decide to move on to another phase in your life. Just as tragic as the loss of financial value in your business is the potential loss of meaning in your life. Planning should address that with the same fervor that it does the financials.
At POSITIVE Exits, we use the term "Exit Preparedness" to describe the state that is achieved through effective planning.
The reality is that your options and/or your family's future depend on your being prepared long before you may actually want to sell your business.
We understand that it is difficult to spend time on the long term while you are planning how to improve earnings and cash flow for the current period.
Yet, Exit Preparedness is critical in order to realize the maximum value for your business whenever you decide to sell it. There are two distinctly important elements that generally make up an Exit (or Endurance) Plan:
Long Term Strategy to Create and Enhance Value:
Every business needs a strategy, and every business owner should have a long term strategy that ultimately provides the opportunity to enjoy the next phase of life after eventually leaving the business by choice…whenever that might be.
This is a conscious and pre-planned recognition that at some point in life, the options of touring the world, spending time with friends and family, immersing oneself in hobbies, volunteering with organizations that serve the better good, or doing whatever satisfies the owner’s passions outside of work will be the ultimate reward for all those years of hard work building the business.
This element focuses on Creating and Enhancing the Value of the Business, and should be a natural aspect of each business owner’s planning process.
Value Protection and Preservation in the Event of an Unexpected Departure
We would all like things to go according to our own plans, but outside forces often come into play. Death, Disability, Divorce, and any number of other events can force a business to be transferred ahead of plan. A key element of any effective plan addresses the possibility of an early departure in ways that ensure business continuity and protect value for yourself or your family.
POSITIVE Exits can work with you to develop these plans, and give you the peace of mind that comes with knowing you and your business are well prepared for whatever outcome might arise in the future.