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