I find that anytime I write about ways for business owners to back off and make their businesses more valuable the topic of exit planning seems to come up. It’s not that I dislike exit planning, I just find it interesting that advisors often think that activities that make a business more valuable are done to get the business ready to sell.
I find that most business owners don’t make their businesses more valuable because they want to sell them. You make your business more valuable because there is a certain amount of fun and profit involved in making your business worth more.
Here are some reasons that advisors might believe that creating value in a business is just a step towards leaving your business:
It’s easy to talk about exit planning. This is a conversation that’s not hard to get a business owner to participate in. Of course you build a business so that you can sell it. Or at least that’s what conventional wisdom says.
Business owners will engage in that conversation and it’s often like fools gold. If you own a business you’ll talk about exit planning, but you won’t do anything about it. That’s because you probably don’t have a great deal of interest in leaving your business in the near future. You’ll be interested someday, but just not today.
Advisors like this conversation because it allows them to talk with you about products you can buy with them. It’s harder for your advisor to have an intelligent conversation about what you can do today to improve your business. You know you’ll leave your business someday, but be careful of buying products for that day too far in the future.
Advisors think you started your business so you can have a big payday. Advisors are often either a micro-business or they work for someone else. They think that it’s just common knowledge that all business owners are more interested in making a lot of money than anything else.
In some respects this is like those who think about the lottery. Many business advisors look at a business sale as you hitting the lottery. If you own a business you know that having a big payday won’t happen without lots of hard work, strategic excellence, and a little luck along the way.
If your business is in a position to have a big payday you’ll likely not want to sell it anyway. You’re going to be having too much fun and making way too much money to sell it. This is where people who sell businesses show up. They’ll tell you that there is never a better time to sell than today. That may or may not be true. You want to sell for your reasons and not be pressured into it by an outside force.
Advisors know that if you do exit planning they can likely sell you something. When you get serious about doing exit planning in your business you’ll also look at hiring many advisors and making changes in your personal and financial life that will involve paying others a fair amount of fees.
There are lots of advisors who do work in the best interests of their clients. There are also advisors who act like they’re working in your best interest, but really want to set you up to help them (the advisor) make some money. Having an exit planning conversation is a good way to set you up for buying products and services that fit in with the exit process.
There are exit-planning programs that teach advisors exit planning equals a good marketing plan. There are many programs around the country that teach advisors how to work with owners like you to plan the exit from your business. These programs market themselves to advisors as a good way to start a relationship with you, the business owner. The goal for many of these advisors is to put you in a position that you’ll buy something from them.
Exit planning is not a bad thing to do. In fact, having a conversation about how you will transition out of your business is part of wealth management for business owners. Most of the time you’ll not be ready, not have the interest, or have other more important things to do before you get serious about planning a personal transition. Knowing when to move the conversation from a general one to one where you start to take action that’s important.
Remember that when you decide to move from a general conversation about exit planning to specifics that you know why you want to do make the move. After all, it’s always about how you can make your life better.
We’ve put together a Periodic Table of Business Elements. This table has 56 potential strategies you can use as a private business owner. We encourage you to click on the button below and download this Table. We’re sure you’ll find it interesting.