By: Patrick Ungashick
What would your answer be if I asked you "When do you want to exit from your business?" If you answered: "I don't want to exit" or "I plan to exit in five to ten years" – you are like the majority of the hundreds of business owners I speak to every year.
Let's take a closer look as to why these two answers are not the right definitions for a successful exit planning strategy.
What if you're an owner who never wants to exit? I've met many like you, and your passion is a gift. There are several simple reasons why you still must address this question:
- Nobody lives forever - at some point your business, employees, customers and others will have to go on without you.
- While many owners aspire to work for a long time and not "retire" in the traditional sense of the word, keep in mind our definition of exit planning focuses on your financial freedom and not retirement. Financial freedom means that you do not need a paycheck; you can afford your desired lifestyle without earned income.
- You may not always feel the way you do now. I have seen owners change their minds. Within only a few years, the owner goes from wanting to work forever to desiring a quick exit. Many owners suffer from "irrational entrepreneurialism" - a passionate optimism that sustains their enthusiasm deep into working years. (If business owners were not irrationally entrepreneurial, they likely would never have started a closely-held business in the first place).
What if you're an owner who knows that you want to exit in five to ten years?
In my experience, owners who state a number of years from now do not adjust their answer with time.
Click on the video to see why and how you can avoid getting in the bad habit of the Rolling Ten Years.
In exit planning, we start with "when" because the amount of time you have determines the tactics available to achieve your exit objectives. With less time, generally fewer choices exist. By determining WHEN you want to exit using this approach, you will create a healthy sense of urgency that time is not infinite and sound planning needs to get started today.
