Don’t Leave Your Future And The Future Of Your Business Up To Chance
Here’s the deal. At some point in time, you’re going to have to exit your business. That’s just the reality of the situation. But how you exit will greatly depend on the choices you make today. So, think about it. Do you want to leave on your terms – “alive and well” – or take the risk of leaving some other way?
Strategy Wins The Day
Few business owners actually know the exact day and time or even month and year they will exit their business. Because the moment of leaving the business is so far off, these types of thoughts are almost abstract. But, the truth is, identifying your ideal exit strategy takes a lot of consideration and planning. In fact, most business owners will take years to ponder their options and conduct analyses to figure out their best options. While others, unfortunately, will never make a conscious choice. Instead, they will likely let an outside event force their exit.
The business owner who avoids thinking about their exit plan will likely have a nagging thought in the back of their minds about what the future might look like. No matter how successful they are in the present, a simple, but important question will continue to hover in their psyches: How are they get out of their business alive and well? Instead of allowing this question to torment you, how about taking a proactive approach to this critical moment in your professional career and start formulating a plan that will allow you to exit your business on your own terms!
Listen to episode 116, “your baby (business) is all grown up … so what’s next?” on Rea’s award-winning podcast, unsuitable on Rea Radio, featuring Tim McDaniel
It’s How You Start That Matters
The hardest step in determining your exit plan is the first one. During this phase, you will be asked to consider some difficult personal, family and business issues – in addition to the complex tax and legal stuff. Of course, because the conversations that are involved in this process can be difficult, and because there’s really no sense of urgency driving these conversations, people tend to avoid the subject as the years continue to pass them by. Don’t be that person …
To achieve your desired exit plan, start by prioritizing the succession planning process well before your desired time to leave the business and get to work answering important questions like:
- What am I going to do with myself after I leave the business?
- How much money do I need from the business to retire?
- How will my decision about an exit impact my family?
- How can I be sure the business will survive without me?
I’m not a canned-program type of advisor. Also, I don’t believe if you follow certain steps you will be guaranteed success. People and situations are complex and the business world is volatile. There are no guarantees that if you follow certain steps or use a certain program that you will exit your business on your terms. However, if you can answers all these questions above, you are well on your way in determining the right time to exit your business.
Reasons Why You May Not Exit Your Business The Way You Want
Now that I pressed the importance of exit planning, there are some additional circumstances to consider because they might put a wrench in your overall plan and could ultimately postpone or speed up your inevitable exit. When these happens, adjustments to your timeline must be made and additional plans should be identified and put into place to help you adhere to the new timeline. For example, some situations that could impact your exit might include:
- The departure of a key employee.
- An unforeseen and sudden illness.
- Your plans to pass the business on to family might not align with the objectives of your family members.
- A major catastrophic event could impact the overall stability of your business.
- Business burn out.
The good news, is that there are professionals available to help you in every stage of the succession and exit planning process. The valuations and transaction advisory team at Rea & Associates works with hundreds of clients every year to help them overcome their exit planning challenges and they would be happy to help provide you with the insight you’re looking for.
For additional insight on this subject, visit the valuations and transaction advisory services page on the Rea website to learn more.
By Paul Weisinger, CPA/ABV, CVA, CEPA (Cleveland office)