Ironically, growing the business often increases the likelihood and degree of exit-goal incompatibility among co-owners.
It is helpful to understand this from the get-go because co-owners and the people around them (close family members, employees, advisors, etc.) may see the signs of co-owners struggling with exit-goal incompatibility and interpret it to be a relationship problem, which is not always the case.
One of the four possible exit strategies for business owners is to pass the business down to family members. We call this the “Passers” strategy.
Most owners of closely held businesses invest decades of sweat, risk, and sacrifice into their businesses. Business success may already have brought you a personal sense of achievement and significant financial rewards. However, what happens when you exit your business, and you reach your end zone, likely defines your career too.
Most business co-owners understand that they need to be in alignment to grow the companies and operate effectively. However, they often underestimate the importance of being in alignment with each other to achieve exit success.
Exit goal incompatibility is the natural byproduct of the inescapable human differences among co-owners. Some co-owners are younger, some older. Some have smaller families, some have bigger families. Some spend less money. Some spend more. These differences often present no issues during the years the co-owners are working side-by-side with the common goal of growing their business. At exit however, the co-owners may find themselves pulling in opposite directions, unsure how it happened and what to do about it.
Whether you plan for it or not, you will eventually exit your business. But like most owners, you must concern yourself with running your business today. As busy as you are, I encourage you to take a few minutes to see how a well-planned exit can have a very positive impact on your current business.
About 70% of the six million privately held businesses in the United States have more than one owner, and the average number of owners per business is nearly three. Practically all of them want to successfully exit from their businesses one day, and most of them will find that their path to exiting successfully requires aligning their exit plans with those of their co-owners. This is where the challenge begins.
