Exit Planning: The Beginning, Not the End

Many business owners perceive exit planning as the end, and in not wanting to consider the end of a business into which they’ve poured their expertise and years of labor, they ignore it. Perhaps they have an estate plan or buy-sell agreement, so they figure they don’t need an exit plan. Those plans may cover an unexpected death and provide for contingency, but they don’t encompass the full scope of exit planning.

Think about traveling on the highway: The exit ramp you take isn’t a dead end; it’s simply a road to a new route. You should think about exiting your business the same way. It’s not the end of your journey; it’s a new path to enjoying retirement or your next big adventure.

Unlike estate planning or contingency planning, exit planning deals with what happens when you don’t die unexpectedly. Living negates your estate plan! A well-developed exit plan paves the way for you to fully enjoy all that you’ve worked for. At some point, you may look forward to retirement or pursuing another dream and will need to use the net proceeds from your business to fund it. Without proper planning, you may find it very difficult to unlock the assets in your business, or worse, leave money on the table at closing.

With a thorough exit plan, you can begin building value in your business to ensure you realize the greatest amount for it, and you can put all the necessary pieces in place for a smooth transition whether you plan to sell or transfer your business to family members or employees.

Exit planning makes sense even if your exit ramp is a long way down the road. As with all financial planning, the sooner you begin the better off you’ll be in the long run. Your exit plan is your map to your future. Create one now rather than aimlessly traveling down the road. Don’t discover when it’s too late that your exit is just ahead.