Do you have a business exit strategy?
Many entrepreneurs don’t. In fact, more than half of all business owners plan to step away from their firms within a decade — but fewer than 30% have taken concrete steps to plan or prepare for their exits.
You don’t have to be on the cusp of your golden years to benefit from a well-articulated exit plan. Proper exit planning takes years and involves countless moving parts. It’s among the most important projects you’ll undertake as a business owner, and it requires considerable forethought in advance of any concrete action.
Not convinced it’s time to start planning your exit? Here are six more reasons to get started today.
1. Avoiding a Succession Struggle
Succession struggles all too often fill the vacuum left by the absence of a comprehensive succession plan. Avoid this unfortunate, potentially painful outcome by clearly identifying your successor(s) and defining the roles they’ll hold in your stead. It’s not easy to choose among capable family members or trusted non-family associates, but the chaotic, disorganized alternative simply isn’t an option.
2. Leaving the Company in Good Hands
Even if you’re able to avoid an outright succession struggle, the absence of a well-articulated succession plan can have unintended long-term consequences. According to the experts at Corporate Business Solutions, the process of grooming a replacement can take several years — meaning it behooves you to begin it well before you’re ready to step back.
If your exit involves selling to an outside buyer or ownership group, think carefully about the legacy you wish to leave and codify your wishes in your succession plan. When the time comes to sell, hold out for a buyer that shares your vision.
3. Freeing Up Bandwidth to Focus on Your Next Project
Setting the exit planning process in motion is the first step on your journey toward professional peace of mind — or, at least, freedom from the mundane worries that might otherwise impede your competitive and creative drives. If you plan to step back from your current business to focus on a new venture or heretofore peripheral project, your succession strategy could be the biggest single stress-reducing arrow in your quiver.
4. Maximizing Your Value Harvest
Closely held business valuation is part art, part science. If your exit involves the sale of your stake — or the entire company — then it’s of course in your interest to maximize your gains. Beginning the exit planning process well in advance is a great way to get in a “maximizing” mindset. The process may well spur you to undertake value-enhancing projects that you might otherwise have delayed or mothballed.
5. Minimizing Disruption During the Transition
As a seasoned business owner, you know that flying by the seat of your pants rarely works out well. Setting your succession plan in motion well before you’re ready to step back reduces the chances of a major hiccup during the actual transition.
6. It’s Never Too Early to Plan
It’s never too early to begin planning your exit, even if retirement remains a distant dream (or nightmare). With a well-articulated exit plan in your back pocket, you’re far more likely to transition out of your day-to-day management duties — and, perhaps, your ownership role too — on your own terms. Successful entrepreneurs know full well that fortune favors the prepared. All that remains to be done is to tilt the odds in your favor.