In working as a consultant to Baby Boomer business owners who want to sell, I often have people say to me, “Heath, I only wish I had started thinking about selling years ago.”
What they are saying essentially is that “Proper planning prevents poor performance.” Nowhere is this cliché truer than in the world of business exit planning.
The fact is: the majority of baby boomer business owners never take the time to plan for the inevitable day when they will want or need to leave their businesses. These successful business owners come up with every imaginable excuse to avoid this strategic imperative.
The net result of neglecting business exit planning, of course, is that when the time comes to leave (and it will come, no matter what you want) sellers are backed up against a wall and forced to make hasty decisions. These decisions seldom result in the most favorable outcome for the seller and create a lot of unnecessary stress and heartache.
Often, the same issues that make it difficult to discuss things such as funeral planning and life insurance creep into discussions of business exit planning. To some people, thinking about exiting a business is akin to thinking about death- the last great taboo in American society.
Boomer owners also fail to plan to exit their businesses due to inaccurate assumptions such as believing that a spouse, significant owner, child or grandchild will automatically take over the business, or that they can sell the business to their employees when the time comes.
Owners also assume that the personal estate planning they have done will factor in the issues related to their business. While the two things are certainly connected, the strategies for achieving success are quite different.
Your estate planning attorney may be exceptionally competent at keeping as much of your estate out of Uncle Sam’s hands as possible but he or she may know little to nothing about how to guide a successful business sale and create a lifetime stream of income in the process. It pays to have an acquisition expert on your team to create a separate and distinct plan for selling your business.
Another reason for procrastination in planning business exits is that the entire procedure seems overwhelmingly complex. Most business owners are experts at running their businesses, but they realize they haven’t a clue about how to successfully sell one.
Often times, owners approaching retirement realize they need to do something, so they read articles, listen to business experts, watch videos and… get very depressed.
An owner quickly concludes that selling a business in today’s economy is extremely complex. They take one look at their disorganized office and messy, incomplete financials, their neglected infrastructure and lack of systems and procedures, and become discouraged, with no clue where to even begin.
I am guessing the feelings are something like those of a housecleaner hired to clean a 50 room mansion that hasn’t been cleaned in 10 years.
Business exit planning doesn’t have to be this way, though. With a little help from some trusted mentors, you can start planning now and avoid most, if not all, of the mistakes other owners make when leaving their businesses.
Imagine, having a blueprint in your hands months, even years before your exit; a map of exactly what you need to do to achieve a transition that is simpler, faster, and more lucrative.
Imagine having a trusted expert’s guidance, someone who does the best job possible for you because he or she does not work on commissions and is totally versed in the procedures for successfully selling a business.
Only around 3% of businesses on the market sell successfully. Wouldn’t it be nice if you had a way to increase your odds of selling dramatically, and decrease the amount of time your business is on the market?
If you could sell your profitable business for more money, in less time, with a lot less stress, and create a stream of income for retirement that you could not outlive, is there any reason you would not want to do so?
There is a way to do all these things and more if you have the right guidance from seasoned professionals who can help you put together a realistic, workable exit plan.
Consultants and acquisitions experts know that you cannot overstate the importance of having a such plan in place before deciding to sell. This is especially true for Baby Boomer owners who are within 2-5 years of retirement, whether or not you plan on leaving the business to a family member.
An even better idea is if you build your company with a view to selling it from the get-go. After all, a business exit blueprint isn’t set in stone, it’s an organic part of your strategic planning process that can be changed and amended as your needs and desires change.
The most important thing is that you need to start.
To help you get started creating the perfect business exit strategy, Delta has produced a comprehensive check list you can use as a guideline. This list will do a lot to help you start putting together the resources you need in order to write your plan.
You can download it at our website or you can call Delta’s office M-F (Central time) to request a copy. (210) 369-4161.
If you have any questions or need help, please reach out to us either through email or by phone.