Posts tagged with: planning
How do you know when it’s time for a transition? Is it a transition or a transaction or both? Is it your conscious decision, or are things so out of control in your business, you are at a distinct disadvantage? How do you know?
In your business, deciding it’s time for a transition can be colored by a myriad of issues, events, or individuals. A transition can take years to explore, refine and execute.
Strategically planning each step will keep you in control. In contrast, having no plan will take away all your control and leave key decisions up to others.
Take a moment to read the following statements. Do you AGREE or DISAGREE with each statement?
- The business is running well, but I’m bored.
- There’s more to life than running this business, I want to do something different.
- That burning desire to compete isn’t there anymore. I may be “burnt out.”
- I thought all along that my children would take over the business. Now they’ve found other ventures they want to pursue. I don’t know what’s next.
- I’ve been approached by a competitor, I want to know what he’ll pay for my business but I don’t want to ‘give away the store’.
- The market for companies like mine is hot. It may be a good time to sell, but I’m not ready.
- I/my spouse had a health scare. I hope it’s not too late to ‘smell the roses’.
- I’ve been working in my business so long I really don’t know what it would be worth to anyone else.
- I’m tired and drag myself to work most days.
- I don’t know if I can afford my lifestyle if I let go of the business now.
- I can’t sleep at night because I feel like I’m being held hostage to my business.
- My company is starting to lose market share, revenue and/or profits. It’s a trend I don’t know how to fix.
- Most of my wealth is illiquid tied up in the business. I want to diversify by taking some chips off the table.
- We never drafted any contingency agreements. Now family and partnership relationship issues are emotionally draining me and putting the business at risk.
- When I leave my business, I want it to be on my terms and from a position of strength.
How many of these statements describe you right now?
If you AGREE with 0-2
Your company is not facing an imminent transition.
If you AGREE with 3
You would benefit from a frank conversation with a specialist about your transition timeline
If you AGREE with 7-10
Call for a free consultation now, before one more issue arises to derail the business or your transition opportunities
If you AGREE with 10-15
You needed to start transition planning years ago. We can get you back on track and in control. Call today.
Mortality is not my favorite subject either. But leaving a legacy in your business is a way to ensure immortality not possible anywhere else. An effective succession plan establishes the ground rules for what will happen when you are no longer around or no longer capable of managing the company’s affairs.
- To add value and make the business buyer attractive, consider appointing objective outsiders as members to your company’s Board of Directors independent of ownership.
- Establish regular strategic planning meetings that include successors and key employees whom you need to stay fully engaged in the company.
- Select and regularly communicate with a team of outside advisors, including lawyers, accountants, consultants, wealth advisors and tax advisors who have experience with privately held businesses, complex corporate matters and estate planning. These advisors can be a source of insight, continuity and strength as you prepare the business for succession or during an unexpected crisis.
- Be very honest with yourself when evaluating the strengths and weaknesses of candidates you consider as possible successors – internal or external. Try to separate issues of family, loyalty, longevity from issues of business acumen and strategic management.
- Start early to be prepared for the unexpected. Most closely held businesses experience a “sudden loss” of leadership due to death or disability because the owner never planned or prepared for their transition to reinvention; thus leaving behind children or spouses ill prepared to continue to manage the business effectively or sell it most profitably. What would be your plan for the “following Monday morning?” Who would run the company?
- Invest the time and money to train and educate the “next generation” of leadership for the company- whether the successor is your spouse, children or another family member or outside management hired in. If your succession plan calls for a full or partial sale of your business to some or all of your staff, do the same for the employees who will take over.
The foundation for growth and value for your business starts with planning.
“The average business owner spends 80 hours
preparing a business plan and
only 6 hours preparing for their exit”
ROCG 2007 Survey of Business Owners
Read that statistic again:
“The average business owner spends 80 hours preparing a business plan and only 6 hours preparing for their exit”!
That lack of preparation and planning is the reason why owners are ill-prepared to achieve an ideal exit from their business. Instead, they settle for only 50-70% of the value of their business when they sell.
It’s up to you to maximize the value you can receive at exit. It’s up to you, the owner, to demonstrate future value for the buyer, including growth projections to justify the selling price you want to receive on your terms.
You can delay and minimize your efforts and go for a sale that leaves 30-50% of the value of your business on the table or you can plan and strategize over time to prepare you, the business, and your team for the best possible outcome.
Exit planning starts with two exercises, one for you as the CEO, and a parallel exercise for the business. In this exercise you will list your personal core values, your vision and your mission.
Repeat the exercise, with or without your management team, and list your company’s core values, vision and mission.
With values, vision and mission in mind, you can start planning for your exit and what that will mean for the business as well.
By planning ahead, you can be more strategic with each hire, each goal, each decision you make between now and your target exit.
When you have a clear plan for your exit, you will make better decisions, easier, faster, with less risk, fewer mistakes and hit fewer deadends in every area of your business.
With an exit plan integrated into you business plan, corporate goals and strategy will be tied to your end goal, your personal end game.
The first step in exiting on your terms and your timeline is planning. Here are a few areas where you can start planning at absolutely no cost. Planning covers a wide range of issues, decisions and changes. Planning doesn’t have to be expensive. But it takes concentrated time, effort, commitment and follow-through to see results.
Here’s where you can get started now.
You probably built your strategic plan when you launched your business. More than likely, you have not looked at it in a long time, never mind used it as a guide for building out your business. Strategy and planning add value to your business.
When you start preparing for your exit, that strategic plan and any newer versions become valuable intellectual property as well as the guiding strategy for your transition out.
Your business strategy will be a key selling feature of the business that will attract ideal buyers. It should articulate the goals, objectives and prospects of your business, and the implementation of your vision.
Your strategic plan outlines the objectives you will achieve, the order, the timeline and the tactics to be used. Your strategic plan becomes the blueprint for your company’s success and your successful exit.
Strategic Planning Benefits
Still not sold on the value of strategic planning in your company?
Some of the purposes and benefits of strategic planning include:
- Clearly defining the mission and purpose of your business
- establishing realistic goals and objectives consistent with that mission
- defining the timeline and schedule for implementation.
- Communicating those goals and objectives to all stakeholders
- prospective buyers
- Ensuring the most effective use of company resources
- Identifying Key Performance Indicators to be used to assess and measure progress
- Preparing and provide a mechanism for change [to be invoked when needed].
- Ensuring maximum efficiency, effectiveness and integration across all departments
- Providing focus and direction for all constituents
- Increasing productivity by instituting processes, procedures, tracking and measuring
- Resulting in improved communication, team cohesiveness and recognition of accomplishments when goals are reached.
- Pro-actively solving potential problems in the company before they occur
Strategy and planning add value to your business from day one. That same strategy and planning add even more value to your business when you want to monetize it to get out.