Exit Planning Timeline: Why You Should Start Early
Article contributed by guest author, Julie Keyes, CEPA, Leader of the Year Nominee
When starting a business, most owners usually have no intention to exit his/her company but are also aware that one day, they will have to leave his/her role of business owner.
While it may sound negative, it is important to have a plan for the end of your business in mind. We’d like to share a few reasons as to why planning your exit strategy in advance is a smart decision. As an owner, you are often too busy working “in” your business, but working “on” it is essential when it comes to your future transition. Your eventual exit is sure to be one of the biggest financial decisions you will ever make, so planning early and well are key to expanding your future exit options.
- Exit planning in advance can assist with making overall quality business decisions. When keeping your exit in mind, you are taking charge and managing the business that you will eventually sell. Whether it is a lifestyle change, unexpected exit or just the end of your career, you can be confident to hand your business over successfully and ensure continuity. After all, no owner will ever want to see his/her former business to go under. The best way to cover all the bases in your planning is to assemble a dedicated team of advisors. Exit or transition planning is complicated and no single advisor is equipped to handle all the details. Your CPA, financial advisor and business attorney are good sources to start with. If none of them have exit planning expertise, hire a professional exit planner who understands all the moving parts and can quarterback the process for you. If you stop to think about it, you really have only one shot at doing this right. Trying to do it on a budget will definitely not serve you or your stakeholders.
- Starting early will help maximize a company’s value. A potential buyer will seek a company that is operating at its full potential and owners will go after the highest bid. An early start will allow business owners to come up with the best business model and understand how to build a business that they will benefit from down the road. Planning early will involve the company’s overall strategic plan and a value growth advisor (or business coach) is specifically trained to help you create and implement a solid plan for growth and improvement of the company. A well-oiled machine will attract many types of buyers; you want to put your best foot forward. It’s also your bread and butter right now, so why not work with an advisor who can help you maximize your bottom line and enjoy the benefits of your success while you’re still at the helm.An owner’s exit may be cause for concern with employees. An owner should make his/her
- An owner’s exit may be cause for concern with employees. An owner should make his/her employees feel that they can continue to be a part of the success of the business even if he/she is not. It is important to keep communication clear, stay organized and support your employees through the transition between owners. It can give employees great comfort to know that you are thinking ahead and planning for your transition, but it’s not necessary they know all the details. Many times, owners think they need to keep their exit plans a secret, which can apply in certain situations, that approach can sometimes backfire. One way to secure your legacy is to implement employee retention programs, so when you exit, the key people stay on. Losing key people during a transaction can kill a deal since they are so integral to a company’s continued
How would you measure your current state of owner readiness? Find out what contributes to a ready, attractive business by taking the State of Owner Readiness Survey™ at www.OwnerReadiness.com or by visiting www.Exit-Planning-Institute.org. You can also download a full State of Owner Readiness™ Report at http://www.OwnerReadiness.com.
About our author:
Julie Keyes, CEPA, is the founder of KeyeStrategies and president of the EPI Twin Cities Metro Area chapter. She was the champion on the first-of-its-kind owner research initiative in her local marketplace, 2017 Twin Cities State of Owner Readiness Survey and Owners Forum.
Keyes is a national speaker and instructor in the fields of exit planning and value growth and is a brilliant example of results-oriented collaborator. She, along with her local advisor peers, led the way in launching the Twin Cities State of Owner Readiness Survey & Owners Forum, capturing attention owners, partners, and media alike. The success of the research and event resulted in a dedicated EPI Twin Cities column in the Minnesota Business Magazine, for which Julie and her team regularly contribute, reaching over 10,000 owners. Julie now acts as a mentor and advisor to many CEPAs who are now taking on the same initiative.
Julie Keyes has been nominated as a finalist for 2017 Leader of the Year, an honor included in the Annual Excellence in Exit Planning Awards. Julie regularly contributes content and education to middle market business owners. Contact Julie at firstname.lastname@example.org or visit her next local chapter meeting by visiting the Twin Cities Metro Area Chapter site.