Though exit planning for business owners continues to grow in popularity, there are still many misconceptions about the process. When owners clearly understand the reasons for exit planning, they often find that a strong exit plan answers a lot of questions about a business’s future. Today, let’s explore two common misconceptions regarding exit planning and explore some of the benefits of overcoming them.
It’s Only for Owners Who Want to Exit Soon
One of the biggest misconceptions about exit planning is that it’s only for business owners who want to exit their businesses in the immediate future. This simply isn’t true. That is too narrow a focus. Exit planning provides short-, medium-, and long-term strategies for business owners who want to reap all the benefits from the business they started. At its core, exit planning seeks to install systems and processes that allow owners to exit their businesses with financial security whenever they choose. Owners who don’t want to exit anytime soon, benefit from these systems and processes by building value in their company. This planning makes the business stronger while the owner is running it. These systems and processes serve to increase what a potential buyer is willing to pay for a company in the future.
Exit planning for business owners focuses on the future success of the business. This helps provide security for the owners, the owner’s family, and the business should a transition occur.
It’s Not Helpful for Owners Who Don’t Want to Exit
Even owners who never want to exit can benefit from exit planning. Every owner will eventually exit their company by either accident or design. Unfortunately, that’s just life. Many lifetime business owners enjoy their work and it’s a part of them. Many feel a social responsibility to their employees and view their company as their legacy. Exit planning can help ensure that the business will not just continue to operate without the owner, but that the company will continue to operate and thrive. Exit planning gives an owner power and control over their future. By increasing company value the owner has the option to take on a partner, hire an operator, or pass on the company to an heir or key employee. In all of these scenarios, the owner’s time is freed to focus on the elements of the business that are most meaningful for him. For owners who want their legacies to live on well after their death, exit planning helps them form succession plans that speak directly to their wants and gives structure for the business’s future.
Exit planning is more than just planning for a business exit. Exit planning is planning for a successful future that overcomes the unexpected. Exit planning gives owners and the people they care about the freedom to live their lives in the way they want.
- Exit planning is more about preparing for an eventual business exit. It provides short-, medium- and long-term strategies for owners who want to reap all the benefits of their life’s work and enhance the strength of their businesses.
- Exit Planning can help create a plan for the owner to eventually semi-retire by building up business value and delegating parts of the business that are less attractive to the owner. It creates a structure within the business to ensure that it will exist and thrive beyond the current owner.