If you are a business owner, you have likely heard the words “exit plan” at some point since you started or bought your company. However, an exit strategy may not be your top priority, because you aren’t planning to leave your business any time soon. Why worry about it when retirement is 10, 20, or 30 years down the road, right?
In my work as a financial advisor, I often encounter business owners who have this mindset. They think a transition or exit plan is a task for their future selves to sort out when the timing is right, or they may avoid the topic because the thought of leaving the business they worked hard to build makes them feel uneasy or overwhelmed.
As a partner of TruStone Wealth Management, I understand why business owners feel this way. Owning a business can be an incredibly personal endeavor into which people invest a lot of their time, energy, and money to make it successful. But as a financial advisor who is certified in exit planning, I also know that going through the process is essential to determine the strategic direction of your company, preserve your culture, and increase the value of your business (and ultimately your wealth).
Business owners without an exit plan run the risk of decreasing the value of their company if something happens to them unexpectedly. A business without an exit plan is like assembling furniture without instructions: the more work people must do to put the pieces together, the more likely they are to abandon it.
If you fit into this group, you are far from alone. However, you do not need to figure out your exit plan on your own. You have access to professionals, like our team at TruStone Wealth Management, who are ready to help you navigate each step of the exit planning process by examining issues related to your industry, your tolerance for risk, your retirement timeline, and other critical areas of operating a business, so you can make an informed decision on when to sell your company and review tax planning strategies related to the sale.
It’s important to note that I refer to exit planning as a “process” because it does not happen overnight. Preparation takes multiple meetings with your financial advisor to build an exit strategy that considers every “what if?” scenario. The sooner you start creating this roadmap, the sooner you will feel more at ease about the future of your business.
Allow our team to shed a light on what this process entails so you have a better idea of where to start, what to expect, and how to help ensure you leave your company in good hands, no matter where life takes you.
Step 1: Data Collection
The first step in the transition or exit planning process is to discuss your goals, values, needs, and key stakeholders with your financial advisor. This will provide a fuller picture of the past and present of your company, so you can set a solid foundation for its future.
Step 2: Preparation
To make an informed decision about the future of your company, you need to know your options. You and your financial advisor will explore the options available to you, weigh the risks, and prepare a wealth management plan that makes you feel more secure.
Step 3: Discovery
Next, you will work with your financial advisor to identify opportunities that could increase the value of your business, and set specific steps for the transition. Your advisor will also help facilitate conversations with your family or other stakeholders to help ensure everyone is on the same page about the plan.
Step 4: Implementation
The last step is to put your exit plan into action, even if you are not actively leaving your business. Your advisor will monitor your wealth management tactics and collaborate with the appropriate professionals to keep your plan on the right track for whenever you are ready to hand over the keys.
The CEPA® Difference
While you can create an exit plan with any financial advisor, choosing a Certified Exit Planning Advisor (CEPA®) enriches the process by giving you access to a professional who is specifically trained to help you understand the complexities of exit planning, define your goals, and develop a holistic strategy that considers both your personal and professional goals.
You worked hard to build your business. If you’re looking for a sign that it’s time to create an exit strategy, this is it. Get started with a qualified advisor like one of our CEPA®-certified team members at TruStone Wealth Management today to help ensure a smooth transition in the future.
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