Today you may be thrilled about running your business. Things are going well. Why do you need to think about exit planning? Some people find the mere mention of it depressing. They figure it’s something they’ll deal with "when the time comes." Yet the reality is that figuring out how to successfully leave your business is something that takes a lot of planning and preparation. It usually takes at least a year to sell the business itself, but it could take two or three years prior to that to prepare for a sale. If your desired exit strategy is an ESOP or some other internal transfer, that could take 5 to 10 years. Whether it's exit planning or some other long-range goal, we all have a tendency to procrastinate. So that's my "free pass" answer: it’s human nature.
I think one of the reasons we procrastinate is because the thought of how we’re going to leave our business quickly becomes overwhelming. From the complexity of how to do it, to doing the work involved to prepare, put a plan in place, act on it and try to understand all of the details -- it makes your head spin. Pick any topic around selling your business, M&A, or exit planning and it can quickly turn into a complex or highly technical discussion -- valuation, transfer methods, contracts, legal and tax issues, and the list goes on. You can get into the weeds fast. So you take a complex topic with big financial implications, then couple it with all of the soft issues that need to be addressed and it just becomes too much.
My advice is to tackle exit planning in the same way you would tackle any big goal, which is to start small. If you are training to run a marathon, you don't go out on the first day and run 26 miles. It's a long process made up of a lot of small steps. Instead of procrastinating and getting overwhelmed, start small by reading some good books and blogs. There are lots of good resources out there, Divestopedia.com being one of them. Start talking to people about your exit, whether it's just family and friends, or experienced advisors. Get educated sooner rather than later, set small goals and develop habits that will get you towards that ultimate goal of eventually exiting your business. Maybe this is the year you read "Finish Big," by Bo Burlingham, or have your business valued, or start talking to M&A professionals.
The reality is that someday you’re going to leave your business, whether it’s voluntary or involuntary. The happiest sellers I’ve met are the ones who left their businesses when and how they wanted to. It’s no easy task, but it’s definitely doable.