The Business Owners’ Special Series (B.O.S.S.) No. 23
Business owners face challenges every day. Thankfully, every new challenge results in lessons learned and greater resilience, providing strength and courage to take your business to the next level. Yet most business owners lack the one super power that is easily within reach of all business owners.
What is that super power?
Owners who start business exit strategy planning early may not be able to see the future, but they can predict a positive outcome of a sale at any time, by having their business ready to sell at all times.
Exit Strategy Planning Success
It sounds simple, yet it is so uncommon. Why is early exit planning a business owner’s super power? To start, it gives you control and power that few business owners possess. Also, even when the economy declines, your business has the best chance to be sold at the highest price.
It also means no matter what happens to your health or in your life, you have a business that can run smoothly during your temporary or permanent absence. You are also in the best position if or when you receive an unsolicited offer to sell, which will likely be the highest possible offer, because your business will have everything in place a new owner needs to continue successfully. And ultimately, your early exit planning means no matter how many more years you want to work, you can exit your business with confidence at any time.
Early exit planning is the super power which puts you in control of the exit process. Many business owners go into a reactive mode, when they receive an offer from someone who wants to buy their business. If they pursue this offer, they are reacting to buyer’s action, requests and inquiries, and they are evaluating buyer’s term and conditions, instead of imposing their own. Having the super power of being exit ready at all times means you know the terms and conditions you expect, and you will accept nothing less.
Being exit ready puts your predetermined terms and conditions front and center of any discussions with a potential buyer. You have the power to walk away with confidence, if the buyer will not meet your terms, and you are in a better position to avoid compromising to buyer’s aggressive actions and demands. You will control your exit.
Moving On, When You Are Ready
Being exit ready at all times means you are not focused on a retirement date or age. Instead, you can concentrate on the right conditions and circumstances, which you choose well in advance of any actually exit or sale. You are focused on the how not the when. Your super power of being exit ready at all times allows you to choose the right opportunity and go to market with your business at any time you choose.
In developing your super power, you are not only making your business exit ready at all times, you are making yourself exit ready at all times, as well. You are financially prepared to exit, because you have developed your personal financial plan as carefully as your business exit plan. You are emotionally able to let go, because you have planned and tested your ideal post-exit life, and you can afford your post-exit lifestyle. Having the business and personal plans can remove any fear or apprehension about exiting your business.
How to Develop Your Super Power:
Our process for developing a business owner’s super power is called Value Acceleration, because its sole purpose is to help make certain you and your business are exit ready at all times. Here is a short summary of steps BPM’s Value Acceleration and Exit Planning team follows to help you develop your super power and be exit ready at all times:
1. Learn what your business is worth today:
Do not rely on rules of thumb or hearsay from peers. Have a professional valuation performed for your business by a specialist. Be armed with real knowledge for making smart decisions.
2. Determined what your business needs to be worth:
Sit down with an astute personal financial planner. Lay out all your post-exit plans and current financial resources. Determine how much you need from your business sale to contribute to your personal post-exit resources to completely fund your financial goals and aspirations for the duration of your life.
3. Find the gap, close the gap:
If you determine in steps one and two above that your business is worth less than you need it to be to fund your post exit life, you found the lifestyle gap. That gives you something to aim for. Making your business exit ready means you will take the time now to close that gap by increasing its value through the actions and plans you make today.
4. new mindset:
Developing your super power means developing a new mindset. Instead of spending your day putting out fires, you will focus your everyday energy on activities that enhance value. Train your employees to put out the fires.
5. Your new plan:
List all areas of improvement that can enhance value and incorporate them into an action plan. You will work on that plan every day. Your plan will direct you to focus on assessing your employee base, processes and systems to help ensure you have a business that can run without you. You will see your business through a buyer’s eyes and make improvements that can enhance value from a buyer’s perspective. You will learn to see risks in your business that you never noticed before and then work to mitigate or eliminate those risks.
6. Your personal plan:
Your plan will have steps to determine what you will do with your time, energy, resources and know-how, so you have post-exit life plan that is as stimulating as your life as a business owner. You will pursue your personal exit readiness plan in parallel with your business exit readiness plan, so you and your business will be exit ready at all times.
Avoid the Melancholy Majority – Develop Your Super Power
Over half of business owners will sell their business when they least expect to, due to unforeseen circumstances, according to the Exit Planning Institute. They are further surprised at how unprepared they are, and they become dispirited with the poor financial consequences of exiting their business completely unprepared to do so.
The Exit Planning Institute also notes 75% of former business owners express regret within a year of exiting their business, primarily because they were unprepared and unadvised.
You can avoid being part of these crestfallen cronies by developing your business exit strategy planning – aka your business owner’s super power – right now, because procrastination is the seed of regret. Being exit ready at all times gives you confidence and control, as it puts the power in your hands. Now is the time to develop your super power and become exit ready at all times.
Rich Gunn leads BPM’s Value Acceleration Service Team, which helps with succession planning, transition business exit strategies and exit planning for business owners. Rich is a Certified Exit Planning Advisor and a member of the Exit Planning Institute.
The Business Owners’ Special Series (B.O.S.S.):
The Business Owners’ Special Series (B.O.S.S.) is a library of information for business owners who are proactively seeking guidance from experts on how to implement value acceleration in their business. Be sure to keep reading, if you desire to develop your business to its maximum potential value and gain an understanding of how and why beginning the process sooner results in building greater value.