To Exit Plan, or Not To Exit Plan, That is The Question

All the experts recommend getting an early start on an exit plan for your business, preferably at least 3-5 years’ work prepping the business (and yourself) for that eventual process of selling.  The idea is smart and easily understood.  The better you’ve prepared, the greater the likelihood that the business will fetch a premium price.  Who doesn’t want that?  It’s the right thing to do.

However, in my experience, the right thing to do sometimes clashes with reality and the practical nature of day-to-day business.  Let’s look at some very real obstacles that often prevent business owners from working on their exit plan.

• Too busy.  Exit planning can take a little extra effort, and many small business owners already feel like they are working more than they should.  Who has the energy to spend the next 3-5 years working on “extra” stuff, especially when it is not clear what the “extra stuff” will involve?
• Don’t want to spend the money.  Many small businesses struggle to make enough money to support the owner’s family.  That doesn’t mean their business has no value, but it does impede their desire to spend money on the kind of expert advice that can help them achieve a handsome return on their investment at time of sale.
• Afraid employees and customers may get the wrong impression.  There is a pervasive fear about telling others that you are thinking about selling your business.  It is based on the idea that employees or customers will leave, thus devaluing the business asset.  Though often unfounded, this need for confidentiality usually ends up causing paralysis in moving forward.
• Not sure who would buy the business.  Or put another way, owners sometimes can’t imagine who would want it!  That feeling can turn into a self-fulfilling prophecy because the attitude is easily discerned by potential interested buyers, who may interpret the attitude as lack of confidence in the future of the firm.
• Not sure who to trust.  Although there are lots of “experts” willing to provide advice, have they really helped others through a business sales process?  No one likes the idea of spending professional fees for weak services, but how do you know if they are weak or strong until the service is complete?
• No clear plan of when they want to retire.  Many “maturing” business owners feel like they can keep going indefinitely, even though there’s no evidence in human history of anyone actually doing that!  As a result, we tend to procrastinate.
• Not sure what the business is worth.  Having little idea of the worth of the business can also cause paralysis.  We may think it’s worth more than it is, and don’t want to learn otherwise.  Or we may think it is not worth much at all, and opt to wait for the magic combination of factors that will make it more valuable.

What often happens because of some or all of the reasons above, is that owners procrastinate until they wake up one day and decide that it’s time to sell…. Now!  It’s for that reason that I wrote “Final Act Of Ownership”.  Although it’s preferable to use an exit planning period to pump greater value into the business, sometimes time just runs out, and owners have to do the best they can with what they have.  Even in the sales process itself, there are ways to help a business position itself for a strong sales value.  The more you know as an owner of a “ready-to-sell” business, the better chance you have of success.  And even then, the sales process can still take a year or two in many cases.

Learn what you can about selling your business, and you might even be motivated to start earlier on that exit plan!  You can order “Final Act Of Ownership” at www.amazon.com/author/jerrybaltus.