The typical course of a business owner is the startup or purchase of a business, its growth, development, and maturing, and then its eventual separation and perpetuation or exit from the business world. This rather simplified string of events is just plain not that simple or easy. Each phase of this journey is filled with great days of exuberance and horrible days of perceived failure and ruin.
All rollercoaster rides can’t be smoothed out, and who would really want them to be so mundane? It would not even be any fun or challenging if that were the case. Part of being a business owner is the excitement of proving your risk to be a valid choice and proving it can and does work. Risk planning, or at least risk guessing, does take some part of the owner’s attention to set the ride in motion.
One tool JKL Associates likes to have owners walk through when looking at a new adventure, expansion, change, or something completely out of the norm is to start with the process of how to get out of this or exit this decision if it all goes sideways. This is exit strategy planning not to sell the business or perpetuate it but to cause a thought process of all the possible items that might need consideration in making this risky decision. Typically, the initial idea is filled with all the grandeur of a successful outcome and subconsciously avoids the possible problems. If the exit strategy approach is applied to the decision, then more of the possible challenges can be uncovered and adjustments made in the launch to help ensure those items don’t get out of alignment with end objectives.
This approach can be viewed as very simple, and the process is, for the most part, straightforward. The challenges lie in helping people get to the place of exit and work backward to the items of potential need. At the start of the business, the owners don’t even want to think about failure. It takes the air out of the success balloon. In reality, doing exit strategy planning at the onset actually inflates the possibility of greater success.
One example of an area where this has come into play is with organizations, where multiple people were involved in various capacities at the onset of the business startup. All brought certain skills, talents, and money to the table, and somehow, they placed people in different functional responsibility areas, etc. They may have divided up the stock based on any number of factors and then set sail to run the business. At this point in time, none of them ever thought the business or the members of the startup team would have different opinions about how the company should or could be operated. They never took the time to talk about how do they get out of this if…. Inevitably, something or someone wants or needs to exit. If it happens early in the business life cycle, it can be a bit less complex. If it takes place multiple business cycles into the life of the business, it gets very challenging. A little pre-exit planning strategy would have uncovered some of the possible issues, and they could have been addressed at the onset. At least there would be a means to resolve the exit need with a pre architecutred formula, which was arrived at prior to the intensity or energy of the moment, which unfortunately tends to skew the views of those involved.
This week, challenge yourself to start thinking about the use and value of exit planning as a strategy tool rather than just a future event you will do when selling or perpetuating your business. Granted, it is always a good time to plan the exit strategy for turning your business into a personal financial asset.
Reach out to a JKL Associates Promise Guide and have a no-obligation conversation about how you will benefit from a relationship with our organization as you build your organization for future asset conversation. Give us a call at FL (407) 984-7246 or MI (313) 527-7945
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