I was recently at a financial planning conference where the subject of succession planning came up consistently. It seemed that many of the presenters were absolutely obsessed on the subject of succession planning. More than a few presenters were “appalled” that most financial advisors who were over fifty years old did not have a formal exit plan for their business. Little do these presenters know that there are very few business owners who are over fifty who have an exit plan.
The reason for this is for many business owners having an exit plan is not the most important thing in their lives. Baby Boomers are not going to retire at 55 years old, or for that matter 65 either. They will most likely fade off into the sunset and only retire when their business is no longer meaningful. Because of this, I’m not surprised that most business owners haven’t thought about exit planning in a formal manner.
Instead of thinking about exit planning, it makes sense to me that owners think about value planning. The first step of value planning is moving your business to tactical excellence. Having your business move through tactical excellence allows you as a business owner to have more choices in what they’re going to do with their business as they get older.
Some of the areas you’ll want to concentrate on as you move through tactical excellence are:
Systemizing your business - When your business has documented systems it becomes easy for people to know what they’re supposed to do under many circumstances. When systems are written and systemized, repeatable activities are done with excellence.
Having the owner get out of the way - This is especially true for first generation business owners. Owners who create businesses from scratch have a habit of getting involved in all decisions. Once systems are put in place, the owner needs to let others operate the business. This includes allowing your employees to make mistakes. After all, that’s how you learned to do things correctly and now it’s time for you to let your employees do the same.
Deciding that strategic activities are important - Tactical excellence is becoming the cost of entry to even be in business today. Those businesses that become profitable and successful enough to have choices are those who have become strategically excellent as well. This means the owner has to start taking strategic actions to make their business be successful.
Have measurement systems that allow you to delegate - Creating dashboards for your business allows you to measure and monitor the key areas that drive your business. Making sure your measurements are accurate and up to date will allow you to delegate with confidence.
Most of the business owners I talk with are more interested in changing activities they do within their business than selling their business. If this is true for you, communicate this to those who want to “plan for your exit”.
I’ve put together a Stage 3 Exit Readiness Report I would like you to have. Even if you’re not going to sell your business, having an idea of the drivers for sale will make your business better. This personalized and complimentary report will help you understand the strong and weak points in your company. To get this report click on the button below.
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