COVID-19 BUSINESS RESOURCES (SPONSORED)
Why do I need to plan my exit NOW?
Exit Planning is - Preparing for Life’s Unforeseen Circumstances
A few months ago, you were fully engaged in running and building your business. Things were going well. Now all of a sudden, COVID-19 has shuttered and halted a large portion of our economy. “How am I going to survive,” is the question everyone is asking themselves.
We are currently in the middle of what could easily be called an economic collapse or financial crisis on a global scale. The COVID-19 virus has altered the face and function of every aspect of life on the planet, and this has a major impact on businesses (and their financial health) as well as the people of the world. But even in the middle of a crisis, I would like to offer you a small ray of sunshine and hope.
A few months ago, we were at the highest point of economic expansion our country has ever witnessed. Even at that point, I had clients with stagnant sales and minimal profits. Once you accept that your industry has been hit hard by a recession (something out of your control entirely), you have to be careful not to just sit back and ‘let it ride’, waiting for conditions to return to what they were when you were more successful.
Eric Seifert, Principal
297 West Clay Ave. - Suite 101
What is the difference between success and stagnation? Planning. Those that come out of bad times with the most success are those who utilize the slow time to prepare and plan their future moves for when opportunity knocks once more.
You need to be ready.
Why do you need to think about exit planning? Deciding to move on from your business is a momentous decision that will affect every aspect of your personal, professional and financial life. We realize that some people find the mere mention of it depressing. They believe it’s something they’ll only need to deal with "when the time comes." Now is definitely that time.
The reality is that figuring out how to successfully leave your business is something that takes a lot of planning and preparation.
Are you ready for an emergency exit?
According to a national survey of business owners conducted by the Exit Planning Institute:
Most financial planners estimate that 85% to 90% of the average business owner’s net worth is tied up in the company
76% of respondents plan to transition out of their companies within 10 years, and 50% within three years
49% don’t have a transition plan
34% have a plan that hasn’t been documented or communicated [like, I’m going to leave it to my kids]
75% are dissatisfied after they sell their businesses
Many business owners simply aren’t ready or have unrealistic expectations for this transition. But with the right plan and the right team in place, owners can make their exit as smooth as possible. Even in the midst of a global pandemic, with operations in limbo.
But I Don’t know where to start!?
The reality is that someday you’re going to leave your business, whether it’s voluntary or involuntary. It’s not an easy task, but it’s definitely doable. Even with the current state of the economy and quarantine orders, there are systems we can utilize to help you through this process, and those systems are changing on an almost daily basis. You need an expert, and we can help!
I am thinking about it – what do I do now?
If you are thinking about leaving your business, take the time to reflect on your goals and focus on three main objectives:
Business: Maximize the value of your business. In these uncertain times, the regular rules do not apply for this, and the methods for achieving maximum value are going to vary on a case by case basis. Get a valuation now to understand your baseline.
Financial: Make sure you, as an individual, are financially prepared for your exit. Are your personal finances in good order? What will your income requirements be? Face any credit issues or financial concerns head-on before you go any further. Ensure that your company financials are clear and well organized. Talk to your advisors about exiting in the future.
Personal: Mull over the next chapter of your life. How do you plan to spend your time after you leave the company? What are your interests and passions? Do you want to start a new act in your career, or do you hope to dedicate yourself to philanthropy, hobbies or time with family? Many owners underestimate the emotional impact of leaving their business. But contemplating the question, “What’s next?” is a huge part of this transition, and in these uncertain times, it is a large factor to consider. Establish objectives.
In summary…Exit Planning
Establishing your objectives, telling an advisor and getting a valuation are three simple places to start your exit planning. These are high-value activities that will provide additional benefits to your business and give you lucidity on the future. Maybe your exit planning turns into a more aggressive growth plan for your business or opens up an option that wasn't previously explored. No matter what you discover in this process, your business will be stronger and you will better understand your direction going forward.
Don’t let your business stagnate and grind to a halt during this global crisis. We can navigate this crisis together and still reach your goals – but it will take some planning. Call me today to get started.
If you are thinking about changing banks, or have a major capital purchase in mind, or a business acquisition, we have the resources to find the optimal funding solution. Visit us at https://benchmark4loans.com/
Stay healthy, keep your social distance, wash your hands, and call us with any questions.