With all the time, stress, sacrifice, commitment, and the hard work that goes into building a business and helping it to thrive; you’d think more value would be placed on helping it succeed once an owner is ready to move on.
What business owners fail to realize is that having a formal exit plan is essential at any time. It means that when you decide you want to move on, you are not beginning the process of a succession plan, but simply executing one you have already created.
Regardless of how critical having a succession plan is, nearly 50 percent of owners who want to sell their business at some point have absolutely no exit strategy.
It’s important to keep in mind that the sooner you start planning an exit strategy, the higher the chance of ensuring a stable financial future for both yourself and the business. Below are the 3 top excuses business owners use to delay succession planning:
1. Owners Don’t Think They Need a Formal Plan
As the one who started your company, you probably don’t think that anything can, or will go, wrong. But what happens to your business if something were to happen to you? It’s scenarios like this that illustrate why an exit plan is so valuable.
Owners are often so focused on running and trying to grow their businesses that they neglect to think about life post-business. Nor the business should they happen to no longer be able to run it. Without an exit plan in place, who will take over all the duties that you currently handle? Who can you trust to continue running and growing the company you worked so hard to build?
A formal plan enables business owners to map out what they want to accomplish by exiting. This type of plan might include personal and financial goals, a list of potential successors, and what kind of advisors are needed for support during the process.
2. Creating a Plan is too Complicated
It’s understandable why many owners drag their feet when it comes to creating a plan to sell their business: it’s complicated, it’s confusing, it’s difficult. An exit plan is a lot like building a house; it’s a complex process that often takes longer than initial expectations. And if usually requires support from various experts, and it isn’t something that can be completed in just a few hours.
For most sellers, the exit planning process can take years, especially when you include business advisors, attorneys, finding the right buyer, and any additional time needed to minimize risk and increase the value of your business.
The right advisors will help you better understand the process and can provide guidance, support, and assistance from the beginning to the end of the process. This guidance ensures that you get the best value for your business.
3. Owners Won’t be Leaving the Business Soon
When most of us plan a vacation, we book it months in advance. Yet, despite having weeks to get ready for our trip, most of us are guilty of waiting until the day before to begin packing. Why are we such creatures of bad habits? Well, putting off the tasks we don’t want to do today is frankly the easy way out.
What’s important to keep in mind is that easy choices might not be the right choices. As a business owner, you know that at some point in the future you will leave your business, whether you want to sell it, pass it down to a family member, or exit for another reason.
However, when you have no set time frame determined you will continue to push the planning out further into the future. Too many owners think that finding a buyer to sell their business will be easy. Unfortunately, most owners also fail to think of what happens if there are no interested buyers.
A formal succession plan will help ensure you’re setting yourself up to maximize the sale or value of your business. This also means understanding what the current value of your business is versus what you would accept or need to achieve your goal. There’s no better time to start planning than now.
Whether you are in the early stages of the exit planning process, have yet to develop a formal succession plan, or don’t know where to begin – we recommend seeking the advice of trusted experts and advisors who can help guide you through the process.
Contact us today to find out if your business is equipped to survive your exit and how we can support the process. Creating a definitive exit strategy to withstand a variety of scenarios if the first step and we are here to help you get started.