Exit Planning Starts with Education
As a business owner, you need to begin a learning journey. The more educated you are, the better your plan and the better the outcomes.
You must understand the ʻwhyʼof your exit plan.
The exit and succession plan for each business owner will be different for a myriad of reasons, including individual, personal wealth and health circumstances, outlook on life, family circumstances, and the type of business.
Below are some typical transition pathways that include forced and non-forced exit events:
Non-forced events (Good)
• An offer ʻtoo good to refuseʼ is made to buy the business.
• The business owner wants to transition into retirement.
• The business owner wants to transfer ownership to family members.
• The business owner has been offered a job or opportunity elsewhere
and wants to move onto a new era of his/her life.
• The business owner uses the sale as a means of risk mitigation,
i.e. cashing in whilst the going is good before markets change,
new competitors enter the marketplace, or circumstances change.
Non-forced events (Bad)
• The business owner has a lack of passion or motivation to continue.
• The business is causing the business owner headaches and stress
and he/she just wants out.
• The business is breaking down and sales/profits are going south.
• The business owner does not have access to enough capital or
resources to compete effectively moving forward.
• The business is failing or even going into liquidation.
• Shareholders/partner disputes
• Unexpected events such as divorce, death, sickness, or disability.
If you plan for these events, you are going to have a far better chance of creating maximum value in the business and looking after your personal welfare and wealth as you transition. It will also help you to manage your exit in case of unexpected events such as divorce, disability, or death. The key points of your Exit should be included in your Contingency, Exit & Action Plan.
Exit Planning is Exit Readiness
It's not something you do when you're ready to retire.
You plan so you're prepared to exit when you're ready.
• What would happen to your business if you died tomorrow?
• What percentage of your personal wealth does the business make up?
• What percentage do you think it could make up if you worked
on a plan to increase your business value?
You know with certainty that at some stage you will need to exit your business. Put a plan in place TODAY to ensure the likelihood of a successful transition or contingency plan can take place for yourself, your family & other stakeholders.