The biggest barrier to business owners exiting successfully and not extracting the value they deserve from their business is TIME. Those that “Begin with the end in mind” and plan their business succession and exit strategy early enough will always be more successful. They’re focused on the key value drivers that build the business and make it possible to achieve maximum value at the time of exit.
Good strategy takes time. Locking in your key employees, documenting the value enhancing aspects of the business and making sure it is not key person dependent (on you) all takes time – time you don’t have if you leave it too late!
Some exit strategies – a management buy-out or Employee Share Ownership Plan – can take years to implement. With more sales requiring an element of vendor financing, you cannot decide to retire in 2025, at the age of 70, and start working on your plan in 2024. The best results come with a 3– 5-year timeframe allowing you to select the best exit option, plan the appropriate succession strategy and implement the plan effectively.
Successful succession planning involves preparing the business, your financial position and you personally for retirement and exit. Being half prepared is not good enough!