Today, many well-meaning and successful business people are forced out of their businesses by events beyond their control…
…making exit planning absolutely imperative for the protection of their businesses. The failure to plan for a transition is the greatest threat to any family business bar-none. Though contemplating an exit forces a person to confront their hopes, dreams, relationships, and even their own mortality, the payout of their effort and planning is exponential in the success of their family and business after their departure.
Planning takes a lion- a leader who is willing to make the hard choices, the kind of person that leads in such a way that he lives and leaves a legacy. Planning a transition involves looking forward to an ideal outcome, but also involves contingency planning in case one is unable to reach their goal in the way they originally planned.
Whether selling a company or transitioning, the current business environment makes planning more critical than it has ever been. As it stands, nearly 50 percent of successful business owners plan on exiting their companies before 2020, however, most of these companies will fail to achieve the objectives of their founders.
Why is this? Because even firms with set plans in place will falter due to poor implementation and mismanagement. Statistics show that seven out of ten business owners have no exit plan of any kind. Worse than that, five out of ten family businesses have no buy/sell agreement, which means the very survival of their business is in danger. Of those attempting to sell to third parties, the number one reason a transaction fails is a lack of preparation on a seller’s part.
It doesn’t have to be this way though. A transition may be fraught with challenges, but it is also rich with opportunity. Instead of avoiding the topic of business exiting, see it as an opportunity to lay a foundation for lasting legacy. One day every business owner must exit their business—planned or unplanned!
Getting a business sold may take less than a year, but planning for the best outcome should begin five to ten years before your planned transition. With no guarantee of tomorrow, the sooner you start planning, the better!