EVERY BUSINESS NEEDS AN EXIT PLAN
Exit Strategy Planning is based on the simple premise that eventually every owner will leave the business. The question is whether the owner leaves in a manner that provides maximum benefit and protection to the owner, their family and the business. Business Exit Planning is a proven process designed to allow an owner to identify and achieve specific personal, financial and estate planning goals.
We understand selling a business is the most important financial event in a business owner’s life – the reality is the owner has only one chance to get it right! Not having a formal exit plan puts you at risk of not getting maximum value for your business and could make the transition process much more difficult than it needs to be.
Answer these questions:
- When are you thinking of selling your business?
- How much money will you need when you sell your business?
- Who will end up owning your business?
THE SEVEN STEP SUCCESSION PLANNING PROCESS
Planning to sell your business can be overwhelming when considering the broad range of issues and advisors with whom you will be working. Utah Business Consultants follows the Seven Step Succession Planning Process™ developed by the Business Enterprise Institute. This process considers your objectives in selling your business and aligns current and future advisors to these objectives.
- Your Succession Plan will rest on three owner-established goals:
- When you want to sell or cut back significantly from day-to-day operations
- How much money you want when you sell
- Who you want to sell the business to
- These objectives form the foundation of your Succession Plan.
Where you are is as important as where you want to go. This next step determines what you have so you know what your business is worth. With this in mind, we can determine what needs to be done in order to achieve your objectives in Step 1.
What features, or characteristics, are necessary to make your business saleable and valuable? These features (Value Drivers) either reduce the risk associated with owning the business or enhance the prospects that the business will grow significantly in the future. In this step, we will identify ways of maximizing and protecting your business value.
Selling your business to an outside third party has immediate value to you in terms of cash in your hand. This will certainly minimize your financial risk and eliminate any family succession planning issues. Your succession plan will develop an action plan that will set your business up to sell for its highest value.
A sale to insiders (family members, key employees, other owners) does not end with the closing. Only when your price is paid in full does the sale end. In this step we will identify action items that orchestrate a successful sale to insiders who often lack sufficient cash.
Business continuation is much more than simply making sure there is a new owner. If you die or become disabled before your succession plan is complete, your dream of financial security will become unattainable. Your succession plan will develop solutions to realizing your business’ value in case something unexpected happens to you or your business partners.
The final step in creating your succession plan is to resolve issues related to preserving your wealth and passing it along to your loved ones. For business owners, this issue can be complex at times because a large portion of your total estate is tied up in the value of your business. Your succession plan will work to resolve these issues and provide a clear road map in achieving your goals and objectives.