Are you the kind of person that loves to be spontaneous?  There are so many things in life that being spontaneous can enhance!  A getaway weekend, going to dinner, taking a class for fun and so much more.  However, there are some areas where spontaneous is less than favorable.  Planning the big things will usually determine the success of the outcome.   Such as moving to a new state, a new car purchase, where to go to college, and more.  Planning for your future is probably the most important plan you can build. 

When is a good time to start exit planning? Now!  

So how do you plan for such a big event? Let’s look at some of the common problems business owners face when they hit the plateau in their business that causes them to think about when to Exit:

1. Spending too much time working IN the business that keeps them from working ON their business.

2. Revenue growth is minimal.

3. Staffing/Leadership challenges.

4. Getting older and want to be done.

5. Industry needs are changing in the current economy/market.

3 Key Value Areas to Focus on

Valuation

Business Valuations DO NOT need to break the bank when strategic planning is the objective.  A Fair Market Value Valuation will give any business owner an established benchmark for knowing what their business is worth.  It opens up the discussion to many what-if scenarios.  Is my business protected? Do I have enough capital to be attractive to a buyer in today’s market?  Should I grow or exit? These are just a few of the questions that can come up in the initial valuation of your business. 

Blueprint

Also known as Exit Pre-Planning, the business blueprint addresses business readiness along with personal readiness and how it relates to your retirement.  By pre-planning your exit you will answer this question, “Am I financially ready to sell?”.    Here is where you want to explore goals and objectives for exit.  Uncover what takes up your time.  Are you working IN or ON your business?  Are you caught up in the day-to-day tasks that keep you from moving forward in your growth?  Owner-centric planning becomes necessary in establishing succession and continuity plans.

You will also want to know what your income needs will be for the future.  We call this the Freedom Point.  Working with an advisor is vital to coordinating your business and personal needs to achieve Financial Independence!  Blueprint takes a peek into what this can start to look like for a business owner. 

Value and Exit Acceleration

Once you have discovered where you are in your pre-planning it’s time to grow to exit.  Value Building and Exit Planning are now in your sights.  This is where strategic planning with your certified advisor(s) will accelerate your growth and build your multiple!  Advisors will focus on Finance, Operations, Sales, and Marketing.  When all these areas are balanced you will maximize your success as a business owner.  Building Value is key. 

Tax Planning

Without careful tax planning, owners can pay far more in taxes than necessary.  Looking at your corporate structure and income are just a couple of areas that we look at to reduce tax obligations.  Tax planning is not tax preparation, it is a strategic look at taxes from a planning perspective. 

Financial Planning

The importance of knowing the personal financial plan is just as important as the business financial plan.  If you already have a financial or investment advisor that’s great!  Advisors can work with existing relationships to maximize planning results.  If you don’t have a planning advisor we can help with that too.  It takes an integrated plan that coordinates all the moving pieces needed to make sure you reach financial independence.

• Personal Financial Planning: Ensuring the business supports the retirement plan is important for any business owner.  Both planning processes will feed into each other as you the business grows and you get older.  Coordinated planning recognizes more growth equals more risk.  Protecting all the risks you will face as a business owner takes a team of professionals that have expertise in each of the risk areas. 
• Business Financial Planning: If not managed early, correctly, and continuously, your income needs will not support a desired exit plan.  Business financials reflect the health of the business.  Insurance, taxes, cash flow, and revenue growth must operate optimally to ensure you don’t run out of money.  

Addressing These Challenges

We strongly advise you to establish a baseline value of your business with a formal valuation, if you have not done so or it has been longer than 12 months.  Working with professional advisors helps navigate all the details that should not be missed when planning a successful growth and exit plan. 

Keep in mind that the actions required to mitigate the challenges described here can take years. If business owners wait until they are ready to begin planning, far fewer advisors can help them. Because most owners would like to exit within five years, advisors must alert owners about the advantages and disadvantages of this Exit Path.,