One of the topics that directors and business owners always bring up during consultation sessions is how to plan their life after business. Like them, you might be suffering from three common issues when planning your business exit. These are:
- Lack of alignment among directors;
- No exit goals or vision; and
- No business plan that will prepare the business for an exit.
No Alignment Among Directors
This is an important issue, and yet most directors have this problem. There are instances when the issue is brought up in the different meetings but failed to find the right solution for it. The worst case scenario is that directors try to avoid the subject even if it is in everyone’s mind.
When owners fail to align their personal goals, they are unable to develop an effective exit plan, as well as a supporting business plan. As a result, the investment they put on the company is under-realised. It can be a difficult topic to discuss in the board room, but a company must have an aligned and shared understanding of the issue in order to properly deal with it.
No Exit Goals or Vision
The best time to start planning your business exit is during the start of the business. One of Pro-actions maxims is to “start with the end in mind”. With that said, you should build your empire with an exit goal in mind. And once you have that goal, plan everything towards that goal. Most small businesses are guilty of not having an exit vision. Well, today’s the right time to begin the process.
No Business Plan to Prepare Business for the End
The owner should plan carefully in order to maximise the full potential of the business. The start of the planning stage should always be the end vision. There are lots of options when planning your business exit, such as passing the business on to family members, business sale, management buy-in or buy-out, or simply shutting it down. These options depend on the business plan in order to achieve them down the line.
When the business solely depends on the owner to be profitable, it is not considered attractive or saleable to anyone else. If one finds himself in this situation, it is important to establish a skilled management team that is groomed into creating business processes that are not dependent on a single individual.
When planning your business exit, you should consider the potential tax liability. This is an important area that should be tackled in the planning stage. It is recommended to have tax experts involved in the planning to minimise the liabilities.
As you can see, planning your business exit is an important task to consider. It requires a lot of planning to ensure that the end result is beneficial for all stakeholders. The starting point of the plan is to determine the outcome, and then build a plan that will ensure the security of both the owners and the business. It is also important that you get all the help that you can throughout the process. That way you will be able to achieve your exit vision.
About the author; An Accredited Growth Accelerator Coach and Business Coach with Pro-actions; Scott helps business owners grow their companies and capitalise on their hard efforts; helping the business stay on track and get the owner the full value once it’s finished. For more details and assistance with your business, contact Scott for a free business review.