For the past twenty years or so there has been a movement by a group of advisors to establish a profession called Exit Planning. This profession is supposed to help business owners get ready and execute transitions from their business to another part of their life. From where I sit (and I’ve been involved with this group from its inception) it looks like Exit Planning isn’t working.
It should be about exit planning and not exit plans.
The exit planning business seems to focus on creating very expensive exit plans for business owners. There’s one problem with this: Businesses are not static and as soon as the exit plan is delivered it’s out of date.
Instead of focusing on creating an exit plan, those who want to help business owners leave their business should focus on exit planning. This means we don’t create a plan. We help business owners look at options that make sense and work towards one or more of those options. We try to help business owners create more value in their business.
We need to help make a business sale ready at all times. If we do this well, the owner will enjoy better cash flow today and a better outcome tomorrow.
People who do exit planning should stop calling it exit planning.
I don’t know about you but I hate the term exit planning. It sounds like such a permanent end to things. I find a better term is succession or transition planning.
Isn’t that what we’re really doing? We’re helping business owners move from one stage of their lives to another.
Exit planning should not be a bait and switch opportunity.
Too many advisors from fields such as financial planning, investment management, insurance, accounting, and mergers and acquisitions think of exit planning as a way of getting new clients for their specialty. If the exit planning profession is ever going to be considered a profession it has to stop using exit planning as a way to sell other services.
This is one of my problems with exit plans. These plans are often canned ideas where the preparer is checking a box. There is little work at finding why an owner wants to leave and why leaving in one particular way is better than another one. I rarely see exit planners doing work from the business owner’s point of view. Too often the planning is what the advisor thinks an owner should do that will lead to a sale for the advisor’s specialty.
I know that not all exit planning advisors think this way. I also know that there is a significant portion of those who want to do exit planning so they have a “leg up” on getting ancillary business from clients. If exit planning is to ever be taken seriously this behavior has to stop.
Only a very small percentage of business owners are interested in talking about exit plans.
“If you only have a hammer, your whole world looks like a nail.”
Most business owners aren’t interested in planning an exit today. They might be at some point. In my experience most business owners I run across, not matter how old they are have other interests they want solved first. If you as an advisor can help them, that’s great. If not, it might make sense to stop trying to force exit planning on owners who aren’t interested. Both you and they will appreciate a slower approach.
At the end of the day it’s all about value creation.
Exit planning is really about value creation. When someone sells their company it should be the culmination of years of successful work. If you as an advisor help an owner understand how they can increase cash flow and make their business more predictable you’re doing two things: First, you’re helping the owner make their business more salable. Second, you’re creating more value while they still own the business. In my opinion that’s what exit planning is all about. What do you think?
We have a special report on the 7 Steps of Leaving Your Business in Style. If you’re interested in getting this report, click on the button below. I bet you’ll find some useful information in their as you think about leaving your business someday.