Succession Planning

Begin with the end in mind," says Stephen Covey in his book, "The Seven Habits of Successful Living." Those who have created a successful business know it does not happen without planning, hard work, and a little luck. Yet most have no exit plan for leaving their business. The truth is that most business relationships do not have happy endings. To have a successful business, you must have a customized exit plan in place

What Is Exit Planning

Exit Planning is the deliberate, adaptable, and customized process that a business owner uses so that he (or she) can leave his business on his terms and on his schedule. The process will yield a highly tailored result for each business owner and ensure that all issues are covered.

A complete Exit Plan rests on a 7-step design process. These steps are illustrated in seven simple questions

• Do you know your exact retirement goals and what it will take -- in cash -- to reach them?
• Do you know how much your business is worth today, in cash?
• Do you know the best way to maximize the income stream generated by your ownership interest?
• Do you know how to sell your business to a third party and pay the least possible taxes?
• Do you know how to transfer your business to family members, co-owners, or employees while paying the least possible taxes and enjoying maximum financial security?
• Do you have a continuity plan for your business if the unexpected happens to you?
• Does your family have financial security if the unexpected happens to you?

The corresponding Exit Planning Steps are

• Establishing Owner Objectives
• Establishing Business Value
• Building Value and Cash Flow
• Selling to a Third Party for Top Dollar
• Transferring to Management or Family Members
• Developing a Contingency Plan for the Business
• Family Wealth Preservation Planning

Bottom Line Owners face a number of barriers to a successful exit from their businesses:

Most owners don’t know that there is a proven Exit Planning Process

Most business advisors are unaware of all that can be done to assist owners as they begin to plan for their business exits

Without a plan, exiting your business can appear daunting and, as a result, owners wait until it is too late to undertake it