Exit planning has many different connotations, it’s a very subjective phrase. For some, it provokes a sense of finality – a perceived ‘cliff edge’ of business ownership and involvement coming to an end. Contemplating the finish of what has hopefully been a successful and rewarding business journey can be a salutary experience and raises questions about your legacy, what you do next, your self-perception of being a ‘former’ business owner, and for some the implications of a life stage shift into some form of retirement.
The reality differs in two ways: firstly, an exit plan should extend for several years as you prepare the business and yourself for the next phase, so any sense of an imminent ending is misplaced. Secondly the ‘exit’ should be on your terms and in reality, be a positive gateway to the next phase of life, be that in business or otherwise.
As we’ve written in other articles and posts an additional consideration is to separate your exit planning into two parts, one that deals with you getting back your time from running the business and the second that focusses on how you extract your money. Neither have to be a one-off event, unless that is your preference, so it is quite reasonable and often practical to step back from operational involvement in stages and to reduce your shareholding in steps.
There are various ‘states of mind’ that business owners experience when starting to contemplate an exit plan. Here are three we encounter most frequently and how you can view them positively:
- Release: this can manifest itself in two ways; either a positive sense of seeing how the rewards you have been working towards can be realised, for example the wealth an exit can release, or the knowledge that all the hard work, time and frustration will have an end date.
- Springboard: your exit is merely a stage in your business life and will lead to further, perhaps bigger ventures.
- Natural progression: you are seeking a smooth transition from one stage of life to another, be that to a different type of business or charitable activity or perhaps some form of retirement
In all these examples a clear path to the next stage provides reassurance and confidence that you are on the right track and your investment in your business will pay off. Exit planning is an extension of your usual business planning to include your goals and preferences for the final stages of your business involvement and company ownership.
Ultimately one thing is certain: at some point in the future you will no longer run or own your business. How and when that happens is what we help you plan and achieve. Contact us to find discover more.
(Photo by David Tip on Unsplash)