If you want to find out more about how you can exit your business for the maximum. We have a 7 question questionaire that you can quickly fill out. From there we will be able to determine where your preparation should focus.
Just send Brad an email and he will reply with the 7 questions that will help us to determine where you should start with your exit planning.
From your answers to the 7 questions, we will be able to provide a 2 page assessment. This is provided at no charge and in these 2 pages we layout the next steps for developing a comprehensive exit planning that meets your objectives. The 7 questions take much less than 30 minutes and then your on your way to creating your future.
Do you have an Exit Plan? Why not?
There is nothing as fundamentally important as having an Exit Plan. The purpose of exit planning is for owners to achieve their financial and lifestyle objectives after they leave their business. It covers when you plan to exit, how much you’ll want or need from a sale/transfer of ownership, and to whom you want to transfer (a third party, family, or employees/co-owners).
Dr. Lisa: What’s Exit Planning have to do with TOC, Lean, Six Sigma and continuous improvement?
Brad: It is consistent with TOC’s three questions. What to change, what to change to, and how to cause the change. When a business owner decides how much he or she needs from the sale of the business by when, we can calculate the growth is needed to accomplish the objective. A business that has put in place excellent processes—the kind TOC, Lean, and Six Sigma provide—coupled with a management team that can operate without being dependent on the owner, is much more valuable.
Dr. Lisa: How is exit planning done?
Brad: First, the business owner works with an exit planning advisor to develop the framework for his exit plan. This is usually developed by answering a series of questions aimed at determining when he wants to exit, how much is needed from the sale/transfer of the business in addition to other personal resources, and to whom the business owner wants to sell/transfer the business.
Next, the exit planning advisor coordinates the business owner’s other advisors—like the CPA, Estate Planning attorney, financial/insurance advisor, and business consultant—to flesh out the plan. From then on, apart from course corrections, the plan is being implemented over time until the ultimate exit.
Dr. Lisa: Are most businesses ready to sell?
Brad: No, most are not ready to sell. And a business that is not ready to sell will either be sold for less than the business owner needs, or it will be liquidated.
Dr. Lisa: In real estate, it is well known that before you buy a property, you have an exit strategy. Is this true for businesses, too? Do most business owners go into business with an exit plan?
Brad: No, most businesses are owned and run by entrepreneurs that have grown their business over time. Most of these owners are totally consumed by running their business, and have not thought enough about their eventual exit from the business. This is unfortunate because it can take several years to make the business valuable enough to meet their financial and lifestyle objectives after they leave the business.
Dr. Lisa: What’s the impact of the economy on exit planning?
Brad: Unless the business managed to maintain its sales and profit levels and growth rates, the business is probably less valuable. So, even business owners with exit plans have probably extended the date of their exit and/or reduced the amount they are willing to accept for the business.
Dr. Lisa: How about demographics of business owners?
Brad: With so many businesses owned by baby boomers, there are a lot of business owners our there that would like to exit in the next few years. I heard a statistic the other day that half of all business owners are emotionally—not financially—ready to sell, but are waiting for a white knight to appear, meaning they aren’t doing anything to properly prepare the business for sale.
Dr. Lisa: What are the choices a business owner has for selling or transferring his business?
Brad: The business owner would usually make the most money by selling to a third party. But many business owners have different objectives, and would prefer to transfer the business to a family member(s), or another owner(s), or to an employee(s). Exit planning helps in both cases.
In a sale to a third party, exit planning can minimize taxes and yield the greatest amount of after-tax proceeds from the sale. In a transfer, exit planning can help the owner keep control as long as necessary, minimize risk, and maximize the amount of after-tax money received.
Dr. Lisa: We work with owners of small businesses all the time. I see how exit planning fits. Business owners need to put in place robust processes—using TOC, Lean, and Six Sigma—that help their company grow and become more and more profitable. And they need to put in place a management team to run the business without being dependent on the owner. Both make the business more valuable.
Brad: Correct. Without an exit plan, a business owner does not have an end in mind. However, even with an exit plan, growing more and more sales and profits is not a given. The TOC approach to marketing and sales fits perfectly. Most of these business owners do not now have an offer that is “unrefusable” to their customers and prospects (a “Mafia Offer”) and a robust sales process to deliver it. Improved marketing and sales is a requirement for every company, with or without an exit plan. But coupled with an exit plan, the business owner is more likely to meet his exit planning objectives.
Want to have an Exit Plan? Give us a call (Brad 303-886-9939)or send an email and we will provide you a free evaulation.
Focus & Leverage
Covey: “…anything less than a conscious commitment to the important is an unconscious commitment to the unimportant." Archimedes: “If I can find a lever long enough and a place to stand, I can move the world!"