Common Misconceptions About Exit/Transition Planning for Business OwnersNov 06, 2019
Though Exit/Transition Planning for business owners continues to grow in importance to business owners, there are still misconceptions about what it is. When owners and their advisors clearly understand the point of Exit/Transition Planning, they often find that Exit/Transition Planning has a lot of answers to the questions they have about a successful business future. Today, we’ll look at couple common misconceptions about Exit or what we at CORE refer to as Transition Planning for business owners, and explain some of the benefits of overcoming those misconceptions.
#1. It’s Only for Owners Who Want to Exit or Transition from their current roll Soon
One of the biggest misconceptions about Exit or Transition Planning for business owners is that it’s only for business owners who want to exit their businesses in the near future. That’s too narrow a focus. Exit Planning provides short-, medium-, and long-term strategies for business owners who want to reap all the benefits of their life's work. Because the foundational goal of Exit Planning is to install systems and processes that let owners exit or transition their businesses with financial security whenever they want, even owners who don’t want to exit anytime soon reap the benefits of Exit/Transition Planning. It’s true that a formal Transition Plan gives owners a clear path to a business exit or transition, but Transition Planning also does so much more.
For example, a big focus of Exit Planning for business owners is building business value. Whether owners want to exit their businesses now or never, few would balk at a chance to build business value. Exit Planning lets owners focus on building business value to the point at which they could exit or transition their businesses whenever they want and not have to worry about their financial futures. This planning makes the business stronger while the owner is running it. So, if the owner decides that they never want to leave the business, Exit Planning still makes the business as strong as it can possibly be.
Exit/Transition Planning for business owners focuses on setting the owner, the owner’s family, and the owner’s business up for future success, whether they exit or transition soon or not.
#2. It’s Not Helpful for Owners Who Never Want to Exit Even owners who never want to exit can benefit from Exit Planning. If owners view their businesses as an extension of themselves, Exit Planning gives them the strategies they need to assure that the business thrives with or without them. For owners who want to work themselves to death for the people they care about, Exit Planning lets them maximize company value and plan for how to make that wealth liquid and distribute it on their terms after they die. For owners who want their legacies to live on well after their death, Exit Planning helps them form succession plans that speak directly to their wants.
Exit/Transition Planning is more than just planning for a business exit. Exit/Transition Planning is planning for a successful future that overcomes the unexpected. Exit or Transition Planning gives owners and the people they care about the freedom to live the lives they want—before, during, and after their business exit. Exit Planning lets advisors extend their core expertise to the successful business owner community and reap the benefits of advising the cream of the crop.
- Exit/Transition Planning does more than help business owners plan their business exits. It provides short-, medium- and long-term strategies for owners who want to reap all the benefits of their lives’ work and make their businesses as strong as possible.
- Even owners who never intend to exit have goals for future success. Exit/Transition Planning addresses goals for future success, whether owners want to exit or not.
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