Posts tagged with: financial independence

5 Questions about Your Exit Strategy to Ask Now

Most business owners think they are too young and too busy in the business to ask or answer questions about their exit strategy. Why should they start planning their exit strategy now?

You’re not one of them. That means your eyes have been opened to the imperative of thinking about your exit from the outset of your business – or at least from today forward.

You realize that you have no intention of working this hard for another 5, 10 or 20 years. You’ve built a business you are proud of, that rewards you nicely today and you want to be able to walk away on your terms on your timeline.

Simple and Reasonable

Sounds simple and reasonable. But for many logistical, emotional, and financial reasons, it can’t happen overnight. Unfortunately, most business owners neglect the topic, don’t consider the decisions, and leave the process to the last moment. Unlike their decisive leadership that got them to this point, they’ve sidestepped the following questions. You don’t have to.

There are five key questions about your exit strategy you do want to spend time considering. Explore the tradeoffs of different answers. Sometimes the answer to one dictates the answer to others, but if that one answer changes, you open up other latent possibilities you’d never thought of before. When you lay out your answers to these questions, you will be in a better position to take timely steps and integrate all the necessary elements for your ideal exit. You will be in control of effectively negotiating a successful business transaction to achieve your optimum transaction and transition to reinvention.

  1. How much longer do you want to be actively involved in the business?
    Vague answers like ‘at least 5 more years’ are a way to avoid the question. Dig deeper. Is there an age or a date or a milestone at which time you want to bow out? Maybe it’s easier to look at what you want to accomplish in the business before you’re ready to walk away. This date is important because it triggers every other action, trigger and date along the way to get there.Most successful exit transactions take long-term strategic planning. They can’t and don’t come together in 60 days. You must start the process before you ever thought it would be necessary because it takes far more time than you imagined to line up all facets to suit you.To maximize the value of your business when you do exit, you need to have a clear goal for the company and a plan for your own/your family’s future.
  1. Who will be your likely successor?
    Have you thought about who should be your successor? Should it be your children, one of your children? Should it be your employees? Or would you look for a buyer well-suited to the business, who can take it to new heights? Maybe you think it’s in your customers and staff’s best interest to be acquired by an industry giant or your biggest competitor?There are many options. What’s optimal depends on you, your goals, your industry, your company culture.
  1. What do you need out of a transaction or transition to have the financial independence for your next venture/adventure/retirement?
    This is really two questions and to answer the first half, you need to answer the second half first.
    What will you do next? Do you have a plan? Do you have a project, venture, hobby in mind? Will you travel for 2 years and then build a house up in the mountains? Will you go back to school as a student or professor? Will you volunteer?
    Your plans for your next steps or avocation create the baseline of your financial requirements from any transition or transaction you decide on. Think through your aspirations for the lifestyle you want and the goals on your bucket list you want to fulfill once you exit this business. Clarify what you’ll be doing and what it will take to fund your financial independence. That will set some parameters on your company valuation and the structure of your exit to ensure your future.
    Run the numbers so you know how much you need from the deal so you know with relative certainty that you can pursue and achieve your life’s goals. That has to include basic living expenses, health care costs, long term care costs; and any education funding for children or grandchildren, travel costs, replacement vehicles, vacation home, weddings, philanthropy, legacy planning,  or tax liabilities.
    In his book, Money, Master the Game, Tony Robbins outlines four levels of planning for the future:
  • Financial Security – to cover the basics
  • Financial Vitality – to cover basics plus 50% of regular ‘extras’
  • Financial Independence – to cover 100% of current lifestyle
  • Financial Freedom – to cover current lifestyle plus a few luxuries

What would those numbers look like for you?

  1. Do you know what your business is really worth on the market?
    You need two numbers. In the end it’s up to you to make sure they match. You need to know how much cash you need to take away from the sale of your business, regardless of the form the transaction takes. And you need to know with brutal honesty the market value of your business – what it is actually worth, not what you think it’s worth. Market value always trumps what you ‘need’ out of the business. Don’t get trapped into terms you don’t like because you were only looking at a buyer’s offer number. Use independent experts to value the business before you get locked in during a negotiation. They can often show you some strategic changes to make now to increase market value in your favor that will increase your leverage with potential buyers.
  1. What should you be doing now to minimize your future tax liabilities?
    Don’t look at taxation in isolation. Revisit your business plan now and consider the tax implications for every investment, your projected growth and even your own compensation package. Expand your strategic planning to include contingency planning, succession planning, transition planning, and then run some financial models to see which options look most attractive for your future.


Whether you intend to sell your business in the next couple years, or you’ve set a date 5-10 years from now, it’s never too early to start the planning process. Planning now will help you clarify the ultimate goals you are aiming for. Early exit planning allows you to use your exit plan as a framework for every decision you make for the lifetime of your business.

You built your business as the primary vehicle in your portfolio to provide the financial freedom you intended to secure for yourself and your family. Ask and answer these five questions now to ensure your business will deliver on that promise for the future.

Qualifying Questions For Your Exit Planning Virtual Partner


Virtual Partner – Exit Strategist

When you are ready to ask for exit planning help – how to get out, where do you turn for help? You need to know if they are dedicated exit strategists or is their primary business in a related field or expertise? Here are five questions to ask potential advisors to determine if they will focus on your best interests.

1.   What is your specialty? What is your core business?

You want an exit strategist whose focus is exclusively on your optimal exit, who is not distracted by other disciplines.

 2.   How will you charge me for exit planning services pre and post transaction?

You want to know you are being charged for exit planning expertise and exit planning time, not attorney time to do exit planning. You need an exit strategist on board, engaged in your situation years before you need your attorneys, accountants, and wealth and insurance advisors.

 3.   How engaged will you be in my operational implementation and transition up to the transaction?

Leading up to the transaction, licensed advisors will be focused on the expertise they bring to the table. Their availability will be limited to help you with operational decisions and issues leading up to the transaction. After the transaction, you will need your exit strategist engaged to ensure your total integration into your reinvention lifestyle, but after the transaction, licensed expert advisors will move on to the next transaction. How much will they/can they be there for you?

You want an exit strategist who will be fully engaged in operational implementation, growth and optimization strategies, and your own transformation from operational president/owner to the strategic CEO of a stronger more profitable enterprise, not just the 6-month end game.

 4. Will you help me assess exit options and timing/tax/liquidity impact of each?

You need an exit strategist to help facilitate discussions with all your exit advisors to integrate their recommendations and tradeoffs for each exit option you are considering. Any of your transaction experts who stay focused in their own silo of expertise cannot provide the wider perspective you need to make the best decisions.

 5. What will you do to assist me in determining my reinvention plan and my goals and lifestyle beyond the business exit?

All the licensed transaction experts you engage for their expertise can ask you all the right questions, but they expect you to prepare and deliver the answers on your own. You need an exit strategist who will assist you in developing your reinvention plan and lifestyle beyond the exit, test it, refine it and lay out a blueprint to implement it from Day 1 of your reinvention.

Whether you engage the Exit This Way Out Group as your virtual partner or not, you need to use the materials, checklists, tables and guidelines provided here on the site and in our home-study course to make your business a wealth producing machine that will provide the financial independence you dream of to fund your reinvention.

Why You Need An Exit Strategy

Your business exit is not a death sentence. It should be the ticket to your next venture, adventure, avocation or simply the joy and fun of retirement. Here are just five reasons why you need an exit strategy.

  1. Plan B – Every business owner needs a Plan B. You always have options and contingencies in mind for business decisions and opportunities to consider. When it comes to what you do ‘next’ after this business, you need options too. Plan B could be as simple as closing up shop and walking away when you get tired of the business. Plan B could be what you’ll do next when your hands, your eyes or your legs won’t let you do any more of what you’ve been doing for the last 20 or 30 years. Plan B could be the fulfillment of every promise you made and every dream you’ve had over the last few decades. If you don’t have Plan B, you are in denial.
  2. Plan Ahead – Every CEO is busy in their business, keeping it going, growing, and thriving. CEOs care about their customers, clients, staff as well as their outside support team, investors and others. But when you stay focused on today, tactics, and to-do’s, then your view of the world is narrow and shortsighted. As the CEO, it’s your job, nobody else’s, to look at the long-term goals and direction of the company, the future of the company and the security of your team. The CEO has the strategic responsibility to plan ahead. Own it and everyone will benefit. Ignore it or deny it, and your business will drift with no rudder. When you acknowledge your mortality and plan ahead for your exit, you ensure both your legacy and your dynasty will carry on.
  3. Contingencies – There are business contingencies and there are owner/leader contingencies. As the CEO, you need both in place. Emergencies happen. We have no control over the weather, fire, flood, or earthquake. How will your business continue in spite of/around outside disasters? You need contingencies built in for the short-term or long-term loss of a key team member – do you and your staff know what to do in case someone breaks a leg or quits for health reasons? You need to document a process and a plan for how to proceed so the business doesn’t miss a step. Most importantly, do you have contingencies in place so that if you must get out of the business, the business can continue? Have you made you irrelevant to day-to-day operations? These contingency plans reduce risk and add value to the business. They provide the terms and parameters for how you can indeed exit the business while preserving your legacy and dynasty.
  4. Security – Your business is likely our most valuable asset – and yet it’s also probably the most illiquid asset you own. Therefore, while you are working, drawing a paycheck from the business, it is providing security. But as soon as you can’t or choose not to continue in the role of CEO, what does that do to your financial security, especially long-term. You need to start building your exit strategy now so this business you’ve invested so much blood, sweat and tears into will indeed provide for the security of financial independence which you need when you exit. Setting up and implementing this one element can take years.
  5. Build Wealth – The biggest mistakes almost all CEOs make in both large and very small businesses, is that they settle into building a business that provides only an income stream. They never set up the business to be a wealth-producing machine. They get to the point where they want to exit and there’s nothing there that can be monetized anywhere near the value they think it’s worth. Their wealth is so tied into the business; they can’t leave with the financial independence they dreamed of. There is a solution.

With an exit strategy in mind all along the way, then every day-to-day decision is tied to the strategic long-term goal of a specific exit strategy. When you focus on a wealth-producing strategy, the income stream will be there.

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