You’ve Been “All-In” With Your Business – What Do You Do When It’s Time to Get Out?
Entrepreneurs are a unique breed. We go into business for a variety of reasons and at the top of that list is freedom and independence, financial security, controlling our own destiny and of course, the all-important pursuit of our dreams. We spend years creating the vision, building the foundation and charting our course to success, but what happens when it’s time to move on, whether that means your own personal retirement or the sale of your business?
There are some key questions you may want to consider when planning your exit strategy or creating your succession plan. Different plans are better suited to different goals and different types of business owners.
Let’s examine some of the important elements that you should consider while preparing your succession plan or exit strategy:
- What is Your “Entrepreneur Personality” and Role in the Company? – It is often discussed that as entrepreneurs we tend to take on too much while we make ourselves an integral and indispensible part of the business. While a valid argument can easily be made that our vision and specific skills are at the core of what makes the business successful, that doesn’t always equate well to being able to walk away from the business when it is time to implement an exit strategy. Consider whether you are painting yourself into a corner by creating a specialized role for yourself that no one else can ever take over. To create true business freedom, you may need to replicate yourself. To create a viable exit strategy, you will need the business to be able to run without your direct involvement. Implementing an exit strategy from a business where you are currently an indispensible part can take years. Be sure to plan accordingly.
- What Are Your Objectives? – An important question to clearly answer for yourself is this: “What do you really want to achieve with your exit?” Sometimes this isn’t as simple as it sounds. Your objective might be to create financial security. You may want to include family members in your plan or plan to reward key employees for their service. Another option could be to create a business that runs like clockwork without you, so you can have the freedom to move into the next phase of your life. Regardless of your personal objectives, it is important that you are clear about it and set specific goals that meet those objectives.
- What Are Your Options? – You may need to educate yourself about the various options available for exit and succession. Does it make more sense to develop your business and prepare it for a sale? Would you like to pass it on to family members or your key employees? What about a merger with another company? There are numerous options available to you, depending upon your primary goals and objectives. Be clear about your intentions and it will be a simpler matter to choose a strategy that makes the most sense for you.
- What is the Current Status of Your Business? – In order to understand where you’re going, you have to know where you are. Once you get clear about what role you will take, your objectives and the best option for your succession or exit, then it will be a vital part of your planning to determine exactly where your business stands right now, in relation to the exit or succession goals.
- Executing Your Strategy – Once you have determined all of these previous important elements and how they all mesh and intertwine, it’s time to begin executing your strategy. Gaining clarity in every other area will give you a pretty solid idea of how long it will take to implement your strategy. You will likely discover that you need to start executing your plan two to ten years prior to your actual exit. There may be considerations and required changes that can take years to implement, such as the current condition of your business, your own estate plan, asset protection of both personal and business assets and more.
Some professional advice is probably in order to help you gain clarity about the best way to create your exit or succession plan; and the sooner you get some help, the better plan you will be able to create. Your Exit Planning Team will likely include your attorney, CPA, financial advisor and M&A specialist. You may also want to get your key employees involved, since they will be affected by your plan and can play an important role in your exit strategy.
A properly created and executed exit and succession plan can help you create the peace of mind you so richly deserve after having built success in your business, while it gives you a system for tracking your progress. Happy Exiting!