Many business owners believe that they want to sell their businesses to a third party when they first start considering their business exits. Owners who want to start planning for a third-party sale sometimes fear that tight-fisted buyers will be the primary enemy in the way of a successful business exit. However, experience shows that it is business owners who are their own worst enemy when pursuing third-party sales because they succumb to two common Deal Killers.

Briefly, a Deal Killer is a negative aspect of the business or its owner that can kill a deal with a third party if it isn’t resolved before the buyer learns about it. There are several Deal Killers, but two common ones are:

1. An unwillingness to recruit the best possible players for the Deal Team.
2. Failure to preserve the company’s most valuable asset: key employees.

Consider the story of Maxwell DeHaan, a business owner who became his own worst enemy during the third-party sale process.

Maxwell DeHaan was in the middle of exiting his business, deHaan Custom Tempering. His sons Hogan (the company’s CPA and unofficial HR representative) and Dylan (a deal attorney), and daughter Hildegard (a business consultant) worked diligently to position Maxwell to sell his business within the next 12 months. They had taken pains to keep Maxwell as far away from negotiations as possible, due to his short temper and refusal to agree to concessions. They were in contact with a buyer willing to pay $16 million for the business, double what Maxwell needed for financial independence, provided deHaan Custom Tempering successfully passed the buyer’s strict due diligence protocol.

Hildegard and Dylan both agreed that for their father’s company to pass the protocol, they would need to recruit additional advisors to address key business issues. When they approached their father about this, he was livid.

“I spent all this money to get you all these degrees, and now you’re telling me you need more help? Absolutely not. I’m not spending any more money on this. Get it done.”

As Hildegard and Dylan struggled to determine how they could get the company to pass the buyer’s due diligence scrutiny, Maxwell ordered Hogan to inform company employees that he would be leaving the business within the year and that the best performer would receive “5% of the final sale price.” Hogan, who always strived to appease his father, carried out his duty.

Nearing the end of the buyer’s due diligence team’s review, Maxwell summoned Dylan and Hildegard for their final report. Hildegard explained that they had managed to get the company “as close to compliant as possible” with the buyer’s expectations given their limited deal experience and resources. Dylan said that he would do his best to get the most money for the business as possible.

As Maxwell berated Hildegard and Dylan, Hogan entered his office. He told Maxwell that Jeffrey, who was the company’s top salesperson by far, had resigned. In his resignation letter, Jeffrey said that Maxwell’s disregard for his years of hard work by offering a share of the final sale price to “just anyone” was the final straw and that he was leaving the industry to pursue opportunities that valued his work.

“Fine, one less paycheck to write,” Maxwell said in response. “It’s not my fault he’s having a bad quarter right when I’m ready to leave.”

“Dad, this is a huge problem. The buyer thinks that Jeffrey is staying on with the company. His leaving is going to hurt this deal,” Dylan pleaded.

“I’m paying you to figure it out. So, figure it out.” Maxwell yelled.

The due diligence review team came and went, with deHaan Custom Tempering failing in several crucial areas. Combined with Jeffrey’s departure, the best deal Dylan could negotiate was for $7 million, provided Maxwell stayed with the business for five years to give the buyer time to fill in the gaps Maxwell refused to address.

Maxwell demanded that his children decline the deal and take the business off the market, telling them that he would fix the mess they created. But without his key employee, deHaan Custom Tempering began to hemorrhage money. Maxwell never found a capable replacement for Jeffrey, and his children—who grew weary of their father refusing their professional advice—left the company one by one. Maxwell ended up liquidating the company for $2.5 million five years later.

A cavalier attitude toward Deal Killers is common mistake business owners make. If you’d like to discuss appropriate ways to avoid becoming your own worst enemy in the third-party sale process, please contact us today.

Planning for a successful future isn’t homogenous. It simply can’t be. The needs that you and your business have are likely to be different from every other owner and business out there. So, the question you might ask about planning for future success isn’t, “How should I do this?” Instead, it should be, “Which process is the best for me?” Today, we’ll look at three different ways you can begin the process of planning for future success.

Urgency Planning

Many owners like to approach their planning through the lens of urgency. Urgency planning means identifying goals or problems that are of the highest risk, ranking them by risk, and then tackling each element in order. This may seem straightforward, but there are some considerations.

1. How do you define risk?
2. Why do you think a certain aspect of your business is subject to risk?
3. Why do you think you must address this risk before or after others?

Determining why things are urgent guides the planning process. If tackling projects based on their criticality is what’s most comfortable for you, it’s important for you to know why those things are critical and how they affect the other critical things down the list. Pausing to understand your reasoning may also give you some insight into your more fundamental priorities.

From-the-Ground-Up Planning

When business owners first start thinking about planning for a successful future, from-the-ground-up planning is what they initially envision. (This might be a reason why owners sometimes find the concept overwhelming.) The process for from-the-ground-up planning often looks like this:

1. Getting internal affairs in order. This could be hiring the right and the appropriate number of people, conducting quality control or creating yearly goals for each team.
2. Develop management. Once the house is in order, the next step is to find or train managers who can run the company themselves. Developing a strong management team is critical to the success of from-the-ground-up planning because it’s the managers—rather than you—who will keep internal affairs in order and exceed expectations. This will give you time to move to the next step.
3. Designing your ownership transfer. Whether you stay in your business forever, transfer to insiders, or cashing out with an outside third-party buyer, you’ll need to determine the appropriate amount of money you must have to achieve financial independence and how the business can support that need. Planning your future may include anything from installing programs to incentivize, retain, and/or reward key employees to creating a set of business continuity instructions in case you die or become incapacitated.

Hybrid Planning

Hybrid planning takes the two planning methods from above and mixes them together. Doing so lets you maintain a balanced momentum toward the things you’re excited about pursuing while still addressing the most daunting aspects of your planning process.

For example, you might be excited about building your company’s value but dread the idea of finding a next-level management team because you’ve never had one before. A hybrid method lets you combine your urgency planning (building value) with your from-the-ground-up method (installing next-level management) so that you aren’t disregarding the things you’d rather not do. Similarly, you might combine your urgent desire to install your kids as the next generation of owners and leaders, but you’ll also need to support the company documenting its internal systems and processes (a fundamental factor for business stability), which can help your children be more successful.

We can help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

As a business owner, you make decisions constantly that you believe will reduce your risk and/or improve your business outcomes. There are countless ways to do this. In this article, we’ll present ways to leverage your internal strengths to reduce risk and improve business outcomes. We’ll also show you how these strategies can affect your longer-term, post-business planning.

An effective strategy for reducing risk and improving outcomes is having a management team that can run the business in your stead. There are numerous benefits of having such a management team. First, it reduces your company’s reliance on you. This can give you more time to focus on the biggest goals you have for yourself, your family, and your business.

Second, it can act as a source of new ideas to improve the business in general. This is especially true if your management team has a diversity of experience. Different experiences can lead to different, sometimes unconsidered, strategies to improve business outcomes.

Third, it often increases the value of your business. Whether you hope to sell to a third party or an insider, or even work until you die, having people other than yourself who can keep the business humming makes it more attractive to potential buyers.

Having a strong management team also ties into your long-term, post-business planning. If you hope to eventually sell your business to insiders, the management team may end up being a qualified buyer, or they may be critical to supporting your children as they take over leadership. This can give you a head-start on bolstering future performance for a strong and healthy company, leading to a more successful transfer.

For example, incentive plans for your management team give them more responsibility, which lets you determine whether they’re fitting successors or high-level executives. Incentive plans also motivate the team to continuously improve the business because any rewards are contingent on achieving goals that contribute to your future success. This can allow you to wind down your responsibilities without giving up control while increasing your income, reducing your risk, and improving your outcomes.

To take it one step further, a common misinterpretation is that owners must transfer all of their ownership to insiders at once. This isn’t necessarily true. There are many ways to transfer portions of ownership over time, which are often tied to good incentive planning. This can keep you in control while you delegate more responsibilities to other people. It also gives you an out if your management team proves incapable of meeting or exceeding expectations, which protects you against risk.

If you intend to sell to a third party or work until you die, you can set up different kinds of incentive plans to make your desired path and tenure easier. You might consider a “Stay Bonus” structure in your incentive plan. It rewards managers who stay with the business through and after you transition out of it. This reduces the risk that important players will abandon ship and negatively affect your company’s value.

How can you know whether you have a management team that can reduce risks and improves outcomes? A good indicator is how the business operates in your absence. If you’ve ever taken extended time off only to find yourself addressing business issues on your time off, it’s likely you don’t have a strong management team (the same applies if you feel like you can’t ever take extended time off). If you aren’t confident that your management team can run the business well without you, you may want to consider finding managers that can.

To reduce risk and improve outcomes, you’ll likely need to look outside of yourself. But this can be extremely beneficial to yourself, your family, and your business. However, leveraging your internal strengths (or finding strong external managers to join your company) can take time. This means that it’s likely in your best interest to start this planning now, before you absolutely need it, rather than when you need it.

If you’d like help in working through the ways you might reduce risk and improve outcomes in your business, please contact us today.

It has come to my attention that the email format of the newsletter I sent out Tuesday was distorted. Sometimes the technology we put in place to make our jobs more efficient causes more hassle for us in the long run. The process has been edited on our end and I can ensure you will not experience any issues regarding the newsletter format in the future. I sincerely apologize for this error and I appreciate your understanding. Below is this week’s updated newsletter. Enjoy!

Whether it’s because you want to keep the business “in the family” or because you suspect you will not be able to find a good buyer for your business, you may be thinking of selling your business to an employee. The first thing to think about is the kind of employee who can and should take over leadership and ownership. You’re entrusting your business and its future to this person or group of people. We suggest that a “key employee” may be a good candidate to purchase the business.

What is a Key Employee?

Key employees are those who have a direct and significant impact on business value, meaningfully participate in the business’s strategic future, and whose combination of skills and experience would be exceedingly difficult to replace.

Why would you sell to your key employees?

One reason you may want to sell to a key employee is that you believe you have already achieved financial security. You may feel that your employees have earned ownership or that you owe them ownership of the company for their many years of loyalty.  Another reason is you may not have an alternative option. Maybe you have no other third-party offers and no children to pass along the business to, so you look to your rock star employees to continue building your legacy.

Selling to Employees can be Both Fast and Slow

If you have some time to complete a transfer, a key employee might be a good option. Often, an owner must stay active in (or at least in control of) the company for five or ten years after the sale process begins in order to complete a successful transfer and attain financial security. In these years, owners hire and groom employees who not only want to be owners but also have the ability to assume ownership.

If your business has a business value today that you think is too low, you may also be considering a sale to a key employee. Taking more time to transition ownership to one or more key employees may also give you more time to grow business value and capture profits.

On the other hand, selling your business to key employees might be faster or less risky. Typically, key employees are very involved already in the day-to-day activity of the business. They will know how you want your company to run because you have groomed them to run it a certain way. They may share your vision for the future and see opportunities for growth and success that outsiders might miss. As a result, your key employees may be excited to get going on transitioning ownership sooner rather than later.

If you’ve been thinking about selling to employees for many years, or if the thought is just now occurring to you, you’ve reached the starting line for the next phase of your business owning journey.

We can help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience.

Business owners seldom seek to exit their businesses without attaining financial security. They understand that one requirement of financial security is to grow business value, but many struggles to achieve this goal. Fortunately for these owners, Exit Planning can directly address their need to build business value and serve as an unexpected solution for owners who want to increase their businesses’ value but don’t know-how.

One of the pillars of Exit Planning is a timeline that plots the value-building actions that owners should consider in order to position themselves to exit their businesses on their chosen exit date. This timeline incorporates how much the business needs to grow in value to meet the owner’s financial target by the owner’s departure or exit date. The timeline is created after the business owner’s professional advisors assess the owner’s current resources (especially business value and cash flow) relative to the owner’s financial needs post-departure.

For example, a business owner may want to exit in five years with $250,000 of post-exit annual income. Her Advisor Team may determine that the value of her business must grow from $3 million to $4.5 million for her combined ownership and other assets to provide what she needs to achieve her goals. They may also determine that growing cash flow (or EBITDA) by $100,000 per year would likely create that value. Action items and anticipated benchmarks are added to the overall Exit Planning timeline to keep everyone focused on what needs to be achieved and when.

Following the creation of the timeline, the next Exit Planning step is to assess the strength of the company’s Value Drivers. Value Drivers are activities that create value in a company. Third-party buyers, private-equity firms, and even key employees often require businesses to have strong Value Drivers before they consider purchasing the business. That’s because Value Drivers often create sustainable, recurring, scalable, and ever-increasing cash flow.

Some of the Value Drivers that you may install in your business include:

1. A stable, motivated management team that stays after you leave the business.
2. Operating systems that improve the sustainability of cash flows.
3. A solid, diversified customer base.
4. Recurring and sustainable revenue resistant to commoditization.
5. Good and improving cash flow.

Because installing strong Value Driver is a foundational element of proper Exit Planning, and strong Value Drivers typically increase a company’s value and curb appeal to buyers, using Exit Planning to build company value can help business owners begin to solve the value-building question while positioning themselves for their future business exits.

A common mistake that business owners make when thinking about Exit Planning is that they focus more on the term “Exit” than “Planning.” They worry that if they commit to Exit Planning, then they will have to aim all of their energy at leaving their businesses, whether they want to or not. However, Exit Planning goes far beyond the concept of leaving the business in that the Exit Planning process addresses various issues that can positively affect the business’ value, cash flow, and overall operational performance.

If you’d like to learn more about installing Value Drivers in your company or simply want to talk about whether using Exit Planning to build business value is a viable option for you, contact us today.

As a business owner, you likely have plenty on your plate. You have a business to run, perhaps a family to care for, and many other responsibilities that require your time. So, why should you consider pursuing Exit Planning? Can it help address issues relevant to you without eating into what little time you have?

Whether you’re thinking about exiting your business soon or expect to stay in your business for decades, Exit Planning can have positive consequences for you, your business, and your family. Exit Planning uses an owner-centric mind-set. This means that Exit Planning focuses on your goals and desires. More specifically, Exit Planning works to position you to leave the business when you want, with the money you decide you need, and to whomever you choose. Rather than adjusting your goals to fit into a strategy, Exit Planning adjusts the strategies around your goals, giving you more control and freedom over how you approach your business exit, no matter which Exit Path you choose.

This owner-centric style of planning often leads to three positive consequences.

Keeps You in Control

As a successful business owner, you’ve likely spent most of your life calling the shots. You’ve had a vision of success and took control to pursue it. You’ve rarely left things to fate or chance. Exit Planning can extend those efforts into the future of the business and beyond. When owners commit to Exit Planning, they have more control over when they leave, how much money they can get upon leaving, and whom they can leave the business to. That’s because Exit Planning strategies use information about your company as it currently stands to chart a path toward what an ideal exit looks like to you. From growing your company’s value to installing strong management teams to identifying and capitalizing on competitive advantages, Exit Planning works to keep you in control and on course. Exit Planning helps you mitigate the effects of fate or chance on your exit, increasing the amount of control you have.

Introduces You to Proven Advisors

Exit Planning requires a team of advisors, rather than one or two advisors bearing an entire load of Exit Planning. While your Exit Planning Advisor will lead and coordinate your Exit Planning efforts based on your wants and needs, you’ll likely need specific professionals that you may otherwise not work with to move your Exit Plan forward. Your Exit Planning Advisor can help put you in touch with these advisors. Your Advisor Team sometimes includes advisors that you’re currently working with, too. But one of the most important criteria for advisors on your Advisor Team is that they work with you to achieve your goals. This isn’t a one-and-done relationship. The advisors on your Advisor Team collaborate with you and build relationships that facilitate the pursuit of your ideal exit. This collaboration and relationship-building often contribute to clearer and more effective strategies for helping you prepare yourself and your business for your exit, no matter when it may be.

Helps Pursue Your Wants and Needs

For many business owners, their business exits are a defining event. They’re the culmination of their lives’ work, and they often affect their businesses, their families, and even their communities. Few, if any, want what’s essentially their lives’ work to be done in vain. Exit Planning addresses this by drilling into what you need and want for you to consider your business exit and post-exit life successful. This includes instances in which your wants and needs change. It’s fairly common for owners to change their minds about what they want—whether it’s when they want to exit, to whom they want to leave the business, or otherwise—in the middle of the Exit Planning Process. Exit Planning is dynamic, not static, and gives you options to pursue the things that matter most to you.

If you’d like to discuss the positive consequences of Exit Planning or how Exit Planning can potentially fit in your busy schedule, contact us for a consultation today.

One of the toughest things you’ll confront in your planning is focusing on the goals that matter most. You might find that the things you want to do conflict with the things you must do. For instance, you may want to use your analytical skills to increase production—something you can do at any time—during the only time that candidates for a next-level management team are available for recruiting or development. The first project is more enjoyable, but the second is more important to your future. What can you do to overcome overwhelming decisions between doing what you want and doing what you must? Consider the situation of Sybil Marino and Ronda Rowe, co-owner of a manufacturing company.

Sybil and Ronda had co-owned M&R Manufacturing for 20 years. Though they rarely spoke outside the business, they had two things in common: They were still heavily involved in the business’ critical functions—from sales and delivery to operations and internal systems—and they wanted to sell the business within five years. Neither Sybil nor Ronda had any skill or interest in training their managers to take over for them. All of the company’s success flowed directly through their final decisions, and they preferred to keep it that way. They reasoned that they could create more value through their expertise than through searching for and training others, who would never be as good.

When they told their advisor Henri this, Henri stressed that they would need a management team to take over for them if they wanted to sell the business for the money they needed. Sybil asked, “Why should we have to do that? Shouldn’t the people that we sell to be responsible for that? What if we sell to a private equity group? Don’t they just bring their own managers?” Henri explained that most private equity groups pass on most of the business presented to them, even great ones. Henri insisted that it’s a mistake to reduce the pool of potential buyers to such an uncertain group. Sybil and Ronda said that finding and training people to do what they did was too much work, and maybe not even possible. They were so used to self-made success that the idea that managers would want to build a business for someone else was a foreign concept. They quickly became overwhelmed and were tempted to give up on planning altogether.

Doing things differently than what has brought you success can be hard. In this case, Sybil and Ronda were used to doing everything themselves, and they had been doing it for 20 years apiece. How could they possibly train anyone to do what took them 40 combined years to perfect themselves, especially when they wanted to sell the business within the next five years? The idea was overwhelming, and because they thought it was impossible to tackle at once, they began to rethink their planning efforts.

Rather than giving up when confronted with a difficult challenge, we suggest using a process to overcome the overwhelming parts of planning.

Set and Evaluate Your Goals

It’s difficult to determine what will overwhelm you if you aren’t sure what you’re trying to do. Determining your goals—including how much money you’d like from your exit when you’d like to exit, and to whom you’d like to sell—gives you a baseline for how you can act on those goals. More specifically, you can speak with advisors and other business owners who have Exit Planning experience to set realistic goals, which can minimize the likelihood of tilting at windmills.

Do What Comes Easy First

When planning a large undertaking, it’s helpful to start with what you know. This is especially true when planning a business exit. Once you’ve set and evaluated your goals, you have the freedom to address more manageable aspects of your Exit Plan. So, if you feel more comfortable working on your estate plan or personal financial plan foremost, you can start there. Then, after finishing the portions of your Exit Plan you’re most comfortable with, you can use the confidence, motivation, and momentum you’ve built up to approach bigger, more challenging tasks.

Ask for Help

This might be the most challenging aspect of planning, but it’s critical. There will be times and situations in which your expertise will not help you make a valid decision. There are aspects of Exit Planning that can be incredibly complex and may require several advisors. You can always ask your most trusted advisors for help with these challenges, and we recommend that you do. But when the most overwhelming parts of planning arise—such as finding a next-level management team, creating a Deal Team, or implementing incentive plans for key employees—you may need to enlist outside help. Don’t be afraid or ashamed to ask: Asking can save you a lot of future stress. High-quality advisors will work collaboratively, not competitively.

Planning a business exit can be overwhelming. If you’d like to discuss how to approach the hardest parts of planning your exit, please contact us today.

When preparing for a large-scale event—such as an extended trip to a foreign country, sending the kids to college, or preparing your business for the future—the planning required can sometimes look too big and unwieldy to pursue. Planning for the future of your business might be one of the largest-scale financial events of your life, which implies that planning is paramount. How can you plan for a business exit when you have so many other things to do?

As a business owner, you likely have three skills you can leverage in your business exit.

1. Your drive.
2. Your ability to identify talented people to work with and for you.
3. Your ability to implement processes that position you to achieve your goals.

Let’s look at how you can leverage these skills in your planning.

Leveraging Drive

Business owners are driven to succeed. This drive is essential for overcoming hurdles, addressing new challenges, and carving new paths toward more success. You can tap into that drive to begin planning for your business’ future similarly to how you began planning to start your business.

While it may seem like planning piles more work onto your plate, that’s not necessarily true. By diving headlong into planning with the same drive used to start and establish the business, owners often find that they end up with more time, more freedom, and more money in the end. There are three things you can do today to leverage your drive into successful planning.

1. Write down your vision of post-exit life: Writing goals down increases the likelihood of achieving those goals. This does not mean that you need to have a fully fleshed plan for your exit. Broad strokes or ideas, such as “I want to travel” or “I want to volunteer” or even “I want to sit on a yacht doing nothing,” will establish a baseline for future planning.
2. Write down things that are important to you: Your business’ future standing affects more than just you. It can also affect your family, employees, and community. Writing down things that are important to you can help you focus on addressing those things in your formal plans.
3. Talk with trusted advisors: A conversation today with a trusted advisor who can help you may be the catalyst that launches your future planning. Advisors can analyze the wants and needs you have, the current state of the business, and which future actions to take to pursue your specific goals.

Leveraging Talented People

Finding talented people to work with and for you is challenging. Successful business owners have a knack for finding those people, and they are crucial to successful planning. There are two things you can do to lay the groundwork for your eventual business transition.

1. Evaluate your management team: Your top managers may be able to help you position your business for either the ideal future you see for yourself and your company or the less desirable contingencies (death or disability, for example). Can they take the company to the next level? Can they move the business forward if you are less involved or unable to work? Are their interests aligned with yours? It takes time and careful planning to get to a point at which you can enthusiastically say “Yes” to these questions. Start today with a good, honest assessment of your top people.
2. Start considering successors: A key component of a business plan is knowing who your successor will be and preparing yourself, the company, and maybe even your customers for a shift that is inevitable. There is simply no chance that you’ll play your current role forever. Learn the factors that are most likely to take ownership and leadership succession more successfully. Work today and tomorrow to implement processes and talent that support your goals for who will take over the business when you are done, and when that will take place.

Leveraging Processes

Processes drive goal achievement. Rarely do successful businesses become successful by chance. Looking at planning as a process rather than extra work brings familiarity to these ongoing efforts. You can acquaint yourself with the steps involved in creating a successful plan for your business’ future, then use your Advisor Team to turn the process into a comprehensive Exit Plan through which your unique goals and objectives can be realized.

The strengths that helped you start your business can serve you well as you approach your future business planning. If you’d like to discuss more ways to leverage your strengths in your planning, please contact us today.

Planning for major events can sometimes cause a sense of dread. Whether it’s planning a honeymoon, a long family trip, or a business exit, it’s easy to say, “I’ll do it later, when I’m less busy.” While planning a business exit should never encompass your entire life, there are several reasons why you should keep your planning momentum going, instead of planning in fits and starts.

Why It’s Important to Create Planning Momentum Now

On the surface, it might make sense for you to wait until you are ready to exit to start planning for it. But you might take for granted how indispensable you are to your business’ success. In other words, if you were ever to leave the business, the business might be worthless, if not worthless. For example, a business that is primarily reliant on its owner and her industry relationships for maintaining cash flow might be worth $10 million when the owner is present but only $5 million when the owner is not present, reflecting the extent to which she is tied to key customers. Making the business less reliant on you can do two things:

1. Make the business more valuable to whoever intends to purchase your ownership, since they’re buying a stable business rather than your presence.
2. Protect the business’ value (and vicariously, your family and employees) if something happens to you before you exit.

Experience shows that once business owners are ready to exit, they tend to have less motivation to do the things that prepare the business for their exits (e.g., finding next-level management, improving company cash flow). This implies that creating and maintaining planning momentum early and throughout can be the difference between exiting on your terms and exiting on someone else’s terms.

Planning Momentum Can Speed Up the Process

Typically, it takes 5–10 years to properly plan for, implement, and see the results of planning for a business exit. This assumes that you and your Advisor Team consistently work on, work through, and update planning. Failing to keep the momentum going can stretch that timeline even longer. Sometimes, it can mean that planning never gets done at all.

Think about the last big project you did. When you had no interruptions and could focus on the task at hand, you managed to get the project done more quickly. Once distractions began to appear, it took time away from the bigger project. When you went back to it, you likely had to reacquaint yourself with what you were doing in the first place, which took even more time away from you.

Though consistent planning can’t eliminate all distractions, it can speed up the planning process. Because the Exit Planning Advisor and Advisor Team do most of the planning work—based on your goals, needs, and wants—keeping your planning momentum going can get you through the process more quickly. Proper planning usually results in fewer responsibilities—and thus, fewer distractions—for you, since one goal of planning is to position the business to thrive without you.

Planning Momentum Removes Inertia

It can be much more difficult for you to create and implement a successful Exit Plan if you constantly start and stop every month or more. Without consistent planning flow, you and your Advisor Team are likely to become frustrated and apathetic, which can torpedo your efforts to create and implement your Exit Plan.

Consistently progressing through your planning process—even in small, incremental steps—is much more likely to produce the results you expect because ideas and solutions stay fresh. Progress tends to build on itself, which can make it easier to solve bigger problems or achieve bigger goals. For instance, if your business needs a next-level management team to increase its value, you’re more likely to find and hire the right talent if you’re constantly looking for one, rather than only looking when it’s convenient. If you only do planning when it feels urgent, you might miss out on opportunities to positively affect your company’s value, add a competitive advantage, or find a suitable buyer for your business.

Planning Momentum Lowers Costs

It’s no secret that good Exit Planning Advisors and Advisor Teams cost money. The upshot is that those advisors are motivated to be as efficient as you reasonably demand. By maintaining momentum, you can minimize the amount you pay your advisors while maximizing the return. Top advisors typically want to do high-quality work, but they work with many clients. They’ll admit that they need to refresh their memory, revisit issues, or make updates for changes in laws, regulations, or markets. This step backward in order to make the right next step forward can turn into additional fees for you.

Maintaining planning momentum can be a challenge when considering your daily obligations, but it’s a surmountable challenge. If you’d like to discuss strategies that can maintain your planning momentum or how to get back into the swing of planning, please contact us today.

As a business owner, you know that planning is crucial and that the new year is typically when you implement new strategies. As the new year begins, many business owners have begun to examine what they’ll do, if anything, about the long-term future of their businesses.

Winston Churchill once said, “Failing to plan is planning to fail.” Today, we’ll look at what we’re hearing from business owners regarding their long-term business planning to help you gauge what other business owners are thinking and doing and see where you stand.

A Gap Between Thinking and Doing

Rarely do successful businesses simply appear from the ether without rhyme or reason. Successful businesses are often the result of diligent planning and action items that owners and their teams implement. This is especially true of long-term planning. When planning for years down the line, it’s helpful to have both an idea about where you want yourself and your business to be, and the flexibility to adjust to the unforeseen.

In talking to business owners, we’ve found that many agree: Long-term goal achievement requires long-term planning. Digging deeper into that idea, many of those same owners said that a long-term goal they had was positioning their businesses to provide themselves and their families with financial security when they were ready to retire or sell the business.

However, many of those owners also tell us that they don’t have a written plan that will help them achieve financial security through their businesses. They just know that they will eventually need to do something to get them to that point. If you’ve ever had a thought about your business’ long-term future but haven’t begun creating a written plan, you aren’t alone.

What’s Keeping Owners From Planning?

The owners we’ve spoken to have provided three main reasons why they hadn’t begun planning for the future of their businesses.

• They were either “too busy” or “didn’t feel a sense of urgency.”
• They would “act when ready.”
• They had “more pressing issues.”

Among these answers, time is the common thread. Business owners are busy people, and when they think about the futures of their businesses, they tend to view them as an issue so far away that it’s not worth thinking about right now. Yet, when asked how important it is to have financial security for themselves and their families, many owners say that it is either very important or the most important issue they face.

How do owners justify pushing off planning for something that they consider to be of the utmost importance?

Experience shows that owners who object to starting to plan for their businesses’ futures because of time concerns are typically masking another fear. While there’s little doubt that business owners are usually strapped for time, once they realize how many ways the success or failure of their businesses can affect themselves, their families, and their employees, they often spring into action.

There are three pain points that business owners commonly have that motivate them to make time for future business planning:

Building Business Value

“Do you have time to build your business’ value?” There are precious few business owners who don’t have enough time to build business value. A defining element of planning is working to build business value. If this is your biggest hurdle, consider implementing one of these action items in the new year:

• • Recruit, reward, and retain the management team that your business will need five years from now. Your people are critical to the value of your business.
  • Clean house. Make those difficult decisions to change personnel, adopt more modern systems or equipment, or adjust your pricing to reflect market conditions more accurately.

Protecting the Business

Most business owners who say they don’t have time for planning are the focal point of the business. That is, the business wouldn’t exist without them. Being the focal point of the business is a high-risk strategy, however. If anything were to happen to the owner—such as death, a disabling injury, or any event that affects the owner’s ability to run the business—the business, its employees, the owner’s family, and even the community might face insurmountable challenges. Planning can address unexpected issues such as these. If this challenge is keeping you from planning, try one of these action items:

• • Document your responsibilities and set a schedule for training and developing others to share those roles (maybe acting as a back-up when you are away). This can be a multi-year plan: Only bite off as much as you can chew in the new year.
  • Make a written plan (often called a Business Continuity Plan) to describe exactly what you want to see happen if you cannot participate in the business, either temporarily or permanently. Give your family and your employees the information they need to carry on without you in an emergency.

Saving Time

When owners say they don’t have time for planning, they’re usually thinking about the initial meetings with advisors, which they imagine will span several hours as their advisors gather facts about their goals and resources. But once owners get past those first few meetings, they find that planning makes time for them, rather than taking time. That’s because the goal of planning is to make the owner less critical to the business’ functions, which positions owners to only do the things they want over the things they must. If you struggle to find more time, try one of these action items:

• • Ask your professional advisors and your top managers to help with some of the more laborious tasks that help get planning off the ground, such as gathering and summarizing documents, updating financial statements, and describing your organizational structure or systems.
  • Plan in phases. Choose your top four priorities for this year and assign one to each quarter. These might include updating your personal planning, restructuring or eliminating company debt, or implementing a key employee incentive plan to align manager goals with your own.

Planning for your business’ future 5 or 10 years down the line can seem burdensome at the outset, but you aren’t alone. If you’d like to learn more about how planning can affect your situation years down the line, please contact us today.