You’ve just started your business, or maybe it’s been going strong for a couple of years now, so you probably don’t want to think about the next thing yet. That’s a fair ask; you should be able to enjoy the fruits of your labor before worrying about the next chapter. Unfortunately, life comes at you fast, and if something unexpected were to happen, how would that impact you? How would that impact your employees, and the business as a whole?
That’s where Exit Planning comes in. It’s less about how much you’d make on the sale, although that is a decent part of it, and more about securing the legacy you want to leave after you’ve moved on. With a structured plan in place, you can truly enjoy what you’ve built without needing to worry about what could happen to make it crumble.
What is Exit Planning?
Exit planning is a comprehensive strategic roadmap that prepares you and your business for the day you transition out of ownership. When the time comes for you to move on from the business, you’ll want a solid plan in place to keep it a smooth process.
This plan involves you understanding the current market value of your company, what factors impact that value and what needs to change, what options work best for you, what you’d need from the sale to move on, and a timeline that shows when and how you leave.
What Questions Do You Need to Ask?
There are four simple questions that can immensely help narrow down what your plan needs:
- What is your business worth today?
- Knowing your company’s worth both gives you a starting point for planning and the knowledge of what you can sell for.
- What much will it need to be worth to fund your next steps?
- Having a goal in mind makes it attainable. You know what your starting point is, and now you have your desired endpoint. All that’s left is how you get from point A to point B.
- Who will you sell/transition the business to?
- There are a lot of options to look through; you can sell the company, but you can also merge with a different company. There’s also transitioning ownership to a family member or a key employee.
- How do you get from here to where you want to be?
- Getting to the sale/transition is one of the latter steps in the plan. First, you need to get your company to the point you want it to be at. After that, you should look at your options.
Why Would You Need It?
Many things can force you to leave a business unexpectedly. You can have any number of medical emergencies that make staying the owner of a company impossible. You can also simply burn out, and for your mental health you have to leave. Even the shifting of the market can force your hand in selling or transferring the business to someone else, or nothing wrong could happen, and you just want to move on to the next chapter of your life.
All these things can be worked around with enough time to prepare, and that’s what an exit plan is for. It makes sure that you leaving, for whatever reason you do, doesn’t sink the company and you along with it.
What Would Happen Without It?
Many owners don’t think about an exit plan until they’re ready to exit, but the best time to start planning is actually long before that point. So, what would happen without a plan in place? One of three things is the most common: You’re forced to exit with no time to prepare, the business undersells because you’re scrambling for a buyer, or you get stuck because the company is too dependent on you.
Every situation is different, so there’s no one-size-fits-all plan that will maximize your value and protect your company’s legacy. It needs to be built with a financial consultant who understands what’s important to you and how to best ensure it. At Crossroads Insurance, we provide simple, transparent, and tailored solutions that protect what matters most.
With a plan that matches your needs and budget, you can take pride in what you’ve helped build with the knowledge that it can stand without you, and you have the option to look at other opportunities. If you want to start that conversation today or just want some things cleared up, book a consultation at https://crossroadsinsurancegrp.com/.