Readdressing Your Marketing Campaign System for Business Continuity – Post #16
January 18, 2018
What is a Shell Corporation?
January 29, 2018Act Now: Your Owner’s Exit Plan Can’t Wait Until You Sell Your Business – Post #17
Many of us business owners believe that we’re building such an exceptional business that one day a buyer will swoop in and make us instant millionaires. That’s a fairy tale, friends. Business doesn’t work that way. If you’re not prepared to exit your company, then a sale won’t happen. As I said at the beginning of this Building a Sellable Business series, I believe that when you want to sell your business, you should begin at the end. At this point in the process, we’ve opened our business and built value in it, meaning we’ve reached our third business phase – its sale. In order to reap the capital rewards from the seeds of value we’ve sown, we should actively create the business owner’s exit plan just like we mapped out our original business plan.
Podcast Time Index for “Duck! – Not Having an Exit Plan Can Cost You in the End”
00:39 – Duck!
00:52 – Didn’t see it coming
02:59 – Life has interruptions
05:27 – Businesses also have interruptions
07:39 – Start with a goal
08:18 – Set a timeline for your plans
09:48 – Make a step-by-step agenda
12:02 – Choose the right team
13:58 – Start!
17:56 – When to start planning
20:19 – Develop an Exit Plan
Destination Set-Backs
Growing up, my brother and I spent a lot of time outdoors. Like many country boys, some of our fondest memories come from four-wheeling around the countryside. Because it was mostly swampland, we spent the majority of our time getting muddy. On one particular day, we had gotten particularly nasty, dirty, and stinky so before we headed home, we decided to take a swim in the lake to wash off. We jumped on one four-wheeler and set out on a back trail toward the lake.
While we were cruising through the deep woods, I heard my brother yell, “Duck!” Well, he ducked, but I wasn’t fast enough. I was still looking for the duck flying through the air when my entire body wrapped around a Georgia pine limb. Smack! I rolled off the four-wheeler and found myself lying on the ground, looking up at that wretched tree limb.
Well, my brother was laughing his head off, and I was lying there in pain. Luckily, I wasn’t permanently or unalterably injured, but I definitely experienced a setback toward my goal of swimming and playing in that cleansing lake water. We did end up making it to the pond that day. By the time we got there though, we didn’t get the long, relaxing dip we were hoping for. We only had time for a quick rinse.
We’ve Got to Keep Going
Like my journey to the lake, we business owners have a plan in place for how to get where we want to go. The sale of our company is our “lake” destination. We and our team jump on our proverbial four-wheeler, and we drive that way. At some point, though, a Georgia Pine limb is going to get in between our current plans and our ultimate goal. That tree limb could be legal issues, employee troubles, family drama, or health concerns. You name it; we’re going to experience some type of set-back. We’re going to get knocked off the four-wheeler.
But we’ve got to get back up. We’ve got to get back to the four-wheeler, even if we’re limping. We’ll have to brush off the jeers from our family members or friends. We may even get muddier, but we’ve got to suck up our pride and get to that swimming hole no matter what. The muddier we get, the more we’ll appreciate the dip in that promised cool fountain.
Making the Business Owner’s Exit Plan
By this point in our series, you should know what your swimming hole looks like and where it is. And you should have mapped out what you will do once you get there and how long you’ll be “swimming.” In other words, you should already have a business plan in place and be following that plan to build value in your business. You’ve been preparing for this business sale since day one. If you don’t have a business plan, drop everything and do that first. You’re not ready to sell your business yet. You need to go back to the beginning of your business!
For the sake of this series, though, we’re ready to start developing an OWNER’S EXIT PLAN for the sale of our business. While our business constantly cycles through periods of expansion, recovery, and recession, those cycles happen within a linear business timeline.
Up until now, we’ve been swimming in the pools of business beginnings and business building. It’s time to dive into the waters of the business buy-out and how we business owners must personally prepare for it.
An Exit is Inevitable
While I can’t predict the exact timing of a business sale, I can predict one thing for certain. We business owners will leave our business. It’s inevitable. One of the following things will happen to facilitate it:
- We’ll die.
- The business will dissolve.
- A buyer (which could also be a designated family member or employee) will purchase the company.
Knowing that we will not own this business at some time in our lives, then it makes sense for us to begin planning our own exit from day one – at the same time, we make our business plan.
How to Prepare Yourself for the Business Sale
No matter how good your original business plan is, you’ll never be able to walk away from this amazing company you’ve birthed and parented if you’re not mentally prepared. If you haven’t come to terms with letting someone else buy your business, you might even pass up millions of dollars. But there are things you can do now to prepare for the wave of emotions that will inevitably come with your business sale.
What to Include in An Owner’s Exit Plan:
- Decide what you’ll do after you sell. – Make personal plans to travel, golf, take care of grandkids, spend time on a hobby, or begin another business before you leave this one.
- Gather your team. – Let your professional consultants, employees, family members, and friends know what your personal exit goals are so that they can hold you accountable for reaching them.
- Establish a timeline. – Decide what age you want to be when you “retire” or sell your company so that you can make appropriate personal and financial plans.
- Make a step-by-step financial agenda. – If you know when you want to sell, you’ll know how much money you need to set back monthly in personal retirement accounts or savings accounts. If you lay out a detailed financial agenda, you’ll have the money you need to enjoy your life of leisure or your next big venture. Any profit from the sale will just be the icing on your financial cake.
- Hold your team accountable. – Just as your team is holding you accountable, hold them to the fire also. Don’t let anything slip through the cracks that could leave you or your company vulnerable at its time of sale.
Which Business Owner Are You?
You may be a person who constantly develops plans, but you can’t start or implement them. Maybe you’re the person who starts 20 things but can’t finish one thing. Or you might be the person who has his hand in 1001 different things. Whether acting, finishing, or prioritizing is your weakness, I have the same word of caution for you. It’s waaaaaaay too risky to jump right into business or into the business’s sale without having a plan. Many times, it’s impossible.
Creating an Owner’s Exit Plan can provide us with timelines, agendas, financial estimates, and accountability. Walking through these “what-if” scenarios for the time after we leave our business can help us prepare for our next step in life.
Additionally, if we’re preparing to leave, we’re stepping back from day-to-day operations. That leads to a business’s self-sustainability and scalability which we discussed in post #5 and in Post #7. Scalability and Sustainability add value to our company. That, then, adds better predictability of making more profit at the sale’s table.
Act Now
Folks, the best-designed plans don’t do us any good unless we act. So, get back on the four-wheeler and go toward the swimming hole to get there. Let’s start moving in the direction of our business sale and mentally prepare ourselves for it. NOW is the time to act. Right now is when we need to prepare an Owner’s Exit Plan.
Like I always say – Life is hard. Business can be complicated. Money doesn’t have to be. Let’s continue to make our lives, at least, financially simple.
