The High Price of Not Making an Exit Plan – Part Two
Last week’s blog was about why you should have an exit plan for your business, especially considering an unexpected death of the owner. We’ve seen first-hand the tragic impact of an unexpected death on both the family and the business. An exit plan can protect both against unnecessary pain and costs. While you may have your will and estate planning issues well organized (we hope so!), an exit plan for your business (that includes succession planning) will provide further clarity and guidance for your family and your business.
So, if we’ve convinced you to begin, the question today is “Where do I start?”
With all the information available to landscape business owners these days, you might expect that it’s easier than ever to make an exit plan. But put yourself in that situation, how do you start? Should you try to do it yourself? * Well, first, you need to gather a lot of correct information including:
- What are my options for exiting my business?
- What is my business worth?
- Can I sell it to a third party for the right price?
- What is the “right price”? How much is enough to support me and my family through retirement?
- How do I coordinate all of that and minimize taxes?
- What is the timing?
- What do I need to do to bring the business “up to speed”?
- Should I invest more capital to improve the value?
Collecting Information
If you are busy running your business, it’s hard to collect all the information you need to identify what choices you have. How do you know what you don’t know?
Making Choices
Sorting through the information you locate (on the internet, books or other) to figure out which is relevant to your company and whether it is still valid, then figuring out which choices you should be making in what priority order and in what time frame can be daunting. It’s a well-known human phenomenon that having an abundance of options and choices can create a “frozen” state, aka Analysis Paralysis.
Deciding on a Plan
Once you have the information and the choices to be made, you need to make decisions about moving forward. Keep in mind that delaying decisions is deciding to maintain the status quo and can be costly. If you know you want to hire a great candidate who will be a key part of your exit plan and you delay making an offer, you may have missed your opportunity to hire that person. Not deciding can be costly and postponing a decision can also have negative consequences. (Not to mention the demoralizing impact on other staff members if they know you are failing to make decisions.) Once you’ve gathered the information you need and have your choices identified in terms of pluses and minuses, you can and should make informed decisions about how to move forward.
Making Effective Changes
Once you’ve made your decisions, you will need to make changes to adapt to the new reality and support the new situation. If you hired that great candidate, part of the change will be to clarify roles and responsibilities among your senior leadership team considering the new team member. Your plan will become the new reality. With the new reality comes new information, and the cycle begins again.
Refreshing the Cycle
It’s important to establish goals and measurements and revisit your exit plan at least annually. That new senior leadership team will be bringing new information and ideas for increased enterprise value to the table.
You can take the positive action of making an exit plan for your business and yourself and avoid the uncertainty that your unexpected death may cause. It’s never too early to consider your exit plan. Once you have the right information about your choices, you can chart a path to your exit for maximum value and provide a smooth transition for your business, your family and yourself. Whether you have ten years or two years, there is value in knowing your best options.
We’d be happy to have a complimentary discussion about where to start with your exit planning process or other topics about transitioning your business including selling, buying or preparing your business for sale, please reach out to me at 224-688-8838 or email me at [email protected].
We’re here to help you Harvest Your Potential!
*As you might imagine, we would suggest no. There are several highly qualified individuals that you can choose from. We’d like to be one of those you consider!
