Most people would not describe the process of owning and running their own business as “an unplanned adventure”. Yet statistics would suggest that this is exactly what is happening. In fact, it often doesn’t end with a happy, exciting or fulfilling conclusion. 55% of all business exits are due to death, disability, receivership, liquidation or simply closing the doors. Sure, we often can’t do much about death and disability. But even in these situations, did we have adequate insurance to cover the financial risk of something like this happening? In terms of receivership, liquidation or simply closing the doors, these outcomes are often the result of poor planning and implementation around exit and succession planning and building business value.
These are sad statistics. In life we don’t and shouldn’t control our exit, but in business we can, but most of us don’t. It just happens to us rather than being a planned and organised process that results in optimising and realising on the potential value in our businesses.
The current statistics suggest that most people are going on a journey with their businesses with no particular or clear destination in mind. Would we walk out of an airport, hop in a taxi and tell the driver to just drive with no destination in mind? Probably not! Yet in our businesses we are doing this all the time. We are in charge of a ship that is just sailing with no particular port or anchorage in mind. The notion of doing these things seems crazy, yet in our businesses, this is exactly what perfectly sane and intelligent people are doing every day.
The outcomes resulting from this lack of planning around exit and succession planning and building business value are also rather sad. In the cases of death and disability, families are endeavouring to administer estates and manage businesses that are often in a mess. Exiting a business via receivership, liquidation or simply closing the doors are not the options we would choose or that we dreamed about when we first went into business. Even for those businesses that are sold, are the owners realising on their potential value? Sadly, in most cases the answer is NO.
What then is the answer? It’s simple really, act today and start building business value and putting a proper succession plan in place. Engage someone good to help you and just do it!