Most business owners invest incredible amounts of time and energy in their business, but they do not adequately plan for the future.
What happens to the business in the event of death, disability, divorce or discord?
Without a plan, these events can be devastating to the company, to the employees, to the vendors and to all the families involved. Yet the vast majority of business owners do not have an exit strategy in place.
SCORE spoke with Sandra Munier, owner of Tucson-based End Game By Design (www.endgamebydesign.com) and a professional business adviser and transition specialist, about exit planning. Here are some of the key points we learned.
- Education is the key. Most business owners fail to plan for the future because they do not know the incredible possibilities that exist for them outside of the business. Knowing the options removes an element of fear and replaces it with excitement. This awareness gives the business owner new goals to set their sights on.
- It is important to start the process early
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- ideally at least five years before the date of transition. Business owners who invest the time to develop an effective exit strategy typically get offers for their business for about 70 percent more than other businesses in the same industry.
- The best exit strategies require that you work with a team of professionals. A good transition specialist will work collaboratively with your CPA, business attorney, financial adviser, estate-planning attorney and business consultant to maximize the value of the business.
- A transition specialist will work to improve or correct several factors affecting the value of your business. Some of these factors include cash flow, profit margin, expandability, dependence on key employees, vendors or clients, future growth and a host of others. The more valuable the business, the more options the business owner has.
The first step in the exit-planning process is to get an idea of what your options are for the future, and thatβs where a professional can help.
