In preparing for battle, I have always found that plans are useless but planning is indispensable. - Dwight D. Eisenhower
Gen. Eisenhower’s point was that the process of creating a plan provides value because it forces the planner to consider - and make provisions for – the question, What if events don’t proceed as planned?
A plan not only provides context and the basis for adapting to new and unanticipated events, it also offers alternatives based on assumptions about goals, objectives and resources that may need revision.
As advisors, we know business owners who create plans are able to react more quickly to new events than can those without.
Unfortunately, even prepared owners fly without plans, co-pilots or maps as guides when storms force them to alter course toward their business exits. If an unanticipated event arises, such as a significant change in the national economy, they shelve their exit planning thinking (and thinking may be all they have in the absence of a written plan) because their only option is to wait for conditions to stabilize or improve.
These successful owners would never consider a similar passive response to be acceptable in a business plan.
If the value of an exit plan isn’t already obvious, let’s look at a few cold, hard facts.
First, you are far from the only fish in the sea. As the wave of Baby Boomers (those born between 1946-64) reaching and passing retirement age crests, the departures of those who own businesses could result in a glut of companies for sale, driving down valuations and giving new leverage to buyers.
Simply put, it may become a buyer’s market, and sellers such as yourself may be forced to accept less-than-ideal prices or terms for the sale of your business.
Second, if you are a Baby Boomer, the generation following you is not nearly as large, so expect far more sellers than buyers in the marketplace. This too, adds to the glut.
Third, even during boom times not all owners who want to sell their business are actually able to sell. There is quite a lot of variation, even among similarly sized businesses in the same industry.
Differentiating factors become magnified and elements that were not that important while you were growing your business can become glaring deficiencies. You need a clear competitive advantage to grow, thrive and ultimately exit on your preferred terms.
Fourth, if your exit strategy is to wait for an ideal time to exit - such as when buyers are active or markets are good - you give up control of the timing of your exit, how much payment you’ll receive, the terms of that payment and even the type of buyer.
Are you confident that the next boom cycle in your industry or in the overall economy will appear when you need it?
Your reason for putting “exit plan” at the bottom of your to-do list because you believe that, until the economy or your business improves to a certain level, your time and money are better spent preserving and growing business value. But understand that working to create a valuable company is an integral part of any successful exit plan.
So why not start - or move the ball forward - now?
The benefits of exit planning include:
Surgery Practice Buys Cameron Land To Build New Facility
Cece Nunn - Mar 17, 2023
Endowment CEO Outlines Strategic Plan Framework
Jenny Callison - Mar 17, 2023
Doug Hamerski is a nephrologist who likes to spend his free time on other sciences, from circuity to radio. This pastime has now grown to a...
Cameron Lee sees a lot of parallels between golf and life: You have to make good decisions, evaluate risk versus reward, be smart and be hon...
Book and media recommendations from Info Junkie Hoop Morgan, founder of The Forte Institute....
The 2023 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.