The Three-Step Exit Plan
Step 1: Create Your Ideal Outcome
By Jay Carter
If your goal is to successfully exit your business within the next 5 years,
you must have a vision of what a successful exit looks like for you.
That sounds simple enough, right? The problem is that if you are like most American business owners, you have not developed a plan for how your exit will happen, when it will happen, or what you will do after you exit. As a result, you are unwittingly risking the opportunity for a successful exit and the retirement or next chapter of your life you dreamed of.
Why We Don’t Do This Work
When we experience uncertainty, we have difficulty making decisions and taking action. Notwithstanding present economic and political environments, there is a lot of confusion and uncertainty among business owners and our advisors about how to plan for a successful exit. As a result, we’re not sure where to begin, so there is no wonder that most of us just don’t do it.
I want to help you get started right now. This is too important to ignore. It literally can be the difference between a happy, smooth transition out of your business and a train wreck. Right now, is the very best time to begin planning for your exit; the more time you allow yourself between planning and exiting your business, the more opportunities you’ll have to create value and eliminate surprises.
The first step in exit planning is to create your vision –your “Ideal Outcome”
Finding Your Direction
This is your own customized definition of what your life and your business will look like when you chose to exit your business and beyond. What are the financial and non-financial results that you hope for? Exiting your business represents a completely new stage of your life; one that requires planning and preparation to be successful.
One of our favorite resources related to this time of life is a book by Bob Buford called "Halftime: Moving from Success to Significance" In the book, Buford describes Halftime as “a pause in midlife to reflect on our first-half and to discover who we are and what we want at the end of life and to redirect our time, talents, and treasures toward something significant.” A successful second half requires thoughtful planning well before you exit your business.
Whether Halftime hits us at age 40, 50, or 70, most business owners reach a point in life where the pursuit of success becomes less important than living a life of significance. You have spent years building a successful business and may be looking for a new challenge with deeper significance. You can kick-start this process by reading another excellent book entitled "From Success to Significance: When the Pursuit of Success Isn't Enough", by Lloyd Reeb. This book can be used as a guide for discerning what is most important to you and how you can best utilize your God-given talents to maximize impact in your second half.
Charting a Course to Significance/Defining Your Ideal Outcome
Even if you’re not seeking more “significance” for your life at this time, you can begin developing your Ideal Outcome by answering the following questions:
1. Ideally, when do you want to exit your business?
2. Which of these best describes your ideal exit scenario?
a. Sell or close the business and walk away.
b. Sell the business and remain involved
c. Transfer the business to family members.
d. Keep the business and hire/groom professional management to run it for you.
3. What personal financial goals do you have related to exiting your business?
a. What will be your income requirement after you exit the business?
b. What will be the source of this income?
c. Do you have a minimum target value from your business that you expect to receive?
d. Are there purchases, investments, or gifts you would like to make from sale proceeds?
4. What is your vision for your life after exiting the business?
a. Remain involved with the business. Describe.
b. Become involved in another business. Describe.
c. Volunteer your time at non-profit organizations. Describe.
d. Pursue hobbies and leisure activities. What are they?
5. What is your vision for your business itself and your employees after you exit the business?
a. Will key/loyal employees be rewarded for remaining with the business?
b. What legacy would you like the new owner to carry forward?
Your answers to these questions will put you well on your way towards the development of your Ideal Outcome. There are many books, counselors and coaches who can be very helpful in answering these and other questions, depending on how deep you want to go in this work. It is not necessary to have answers to all of the questions in the beginning. Once you have identified one or two key elements of your Ideal Outcome, you are ready to move on to the next two steps of the Three-Step Exit Planning Process. See “Step 2: Creating a Baseline Assessment” and “Step 3: Creating Your Blueprint for Success” to move forward with your plan.
If you’d like to learn more about positioning your business for a successful exit transaction, please contact Jay Carter at Market-View. We’d love to have a complimentary confidential conversation to learn about your unique situation and show you how you can have an executable exit plan within 45 days.
Reach us at:
Market-View
Jay Carter
Founder and CEO
704-904-7543