10 Things Impacted by Your Business Exit

Research survey after survey shows that most owners of small to mid-sized companies lack an exit plan. My nearly 30 years of experience backs this up; practically every day, I see business owners working incredibly hard to grow their companies but giving little thought to their future exit and doing even less to prepare for this inevitable event.

There are many reasons for this lack of planning – owners are busy, buyers seem to be readily available, why worry about exit when you’re having so much fun, etc.

But unfortunately, owners often only realize late in the process how much their exit impacts their world and everything they hold dear. Then, their lack of planning usually increases risk, cost, and stress. Sometimes, it can lead to outright exit failure.

There are 10 things important to most business owners that will be deeply impacted by your business exit. They are:

1. Personal financial security – Most owners have the majority of their net worth tied up in their company. To reach financial freedom and security, you must have a successful exit.
2. Company’s future – How well your company fares in the future will be determined largely by whose hands you leave it in after your exit.
3. Employee jobs – Even if your company continues after you exit, that does not mean the jobs you’ve created will be there. While nobody’s job is guaranteed, most owners want to make sure employees are, at a minimum, treated fairly after they exit.
4. Clients/customers – Owners have a set of values (written or unwritten) that they want to see honored and upheld with regard to how clients and customers are treated after they exit. An exit that tarnishes the company in the minds of the customer is not a successful exit.
5. Spouse and family – One of the biggest exit surprises for owners is how dramatically things change at home; spousal and family relationships and routines are often significantly rewritten as a result of exit. Couples who go into exit unprepared often struggle with the transition.
6. Your tax returns – Exiting is usually the most expensive and heavily-taxed moment in a business owner’s life. A sound exit plan that reduces taxes by even a few percentage points can add a huge gain to the bottom line.
7. Company culture – Most owners quickly embrace that there is a right way – and a wrong way – to exit. Exiting the right way means leaving a healthy culture intact. Exiting the wrong way undermines everything that you have built.
8. Personal identity – We are a society that defines ourselves by what we do. Owners who exit without a plan for what they will do after they exit often find themselves rudderless and regretful.
9. Time/calendar – Exit often rearranges calendars and time commitments, leaving owners who are accustomed to being busy with an uncomfortable void. Owners too often approach their exit assuming this issue will take care of itself when many times it does not.
10. Business partners – Most businesses have more than one owner, and those partnerships are some of the most important relationships in each owner’s life. An exit that is beneficial for one owner should not be harmful to another, yet absent a plan this can easily happen.

It is difficult to exaggerate the impact that exit has on a business owner’s life. That’s why carefully developing a plan is crucial. The planning must start at a minimum of five years prior to exit, when there is time to be proactive. This is the one “top 10” list that business owners want to make sure they get right.