Exit Planning for Business Owners
Kris Kjolberg and Jeff Evanello, experts in the acquisition and sale of advisory practices and firms, explain why every business needs an exit strategy.
Everything in this life has a beginning and an ending, but when business owners first start building their companies, they don’t often plan for their ending. While this may be understandable initially, not having an exit strategy could set you and your successor up for trouble. Even worse, you could lose a lot of money.
Small Business Trends reports nearly half (48%) of business owners don’t have an exit strategy. Kris Kjoberg and Jeff Evanello think that’s a shame because whether you close, sell, or leave your business to family, you could seriously underestimate its value—leaving potentially big dollars on the table.
Show me the money
For example, consider the value of your customer relationship management (CRM) system or database of contacts. Think about those names and all their associated information, the personal relationships, the trust, and the potential they hold for future referrals and business.
How much is all that worth?
What would your best clients think about your closing, selling, or passing your business on to the next generation? Do you know who your best clients are? Perhaps you’ve sold some of them their first, second, or even third home.
Kris and Jeff acknowledge that too few business owners consider bringing their best clients into the process, but they can be valuable sources of information, ideas, and could potentially be the reason why your successor flourishes or fails.
Share your secret sauce
Many real estate agents are much more than the face of their business. They are their business.
These agents know the structure of their business.
They know the systems.
They know who to call.
And among the hundreds of other insights, tidbits of information, tricks, and work-arounds they’ve accumulated over years of experience, they’ve also got their special way of doing things that makes the business hum.
Ask yourself, who else knows what you know? Who else has the recipe to your secret sauce? If the answer is no one, make sure your recipe and all its ingredients are captured and passed along to the next person in charge. That task has to be a part of your exit planning. And it takes time.
Dig your well before you’re thirsty
Believe it or not, exit planning for business owners in the financial services industry can take about 10 years. It takes that long before all the necessary structures, systems, and procedures are in place. Add to that another two years for the seller to stick around and help the buyer build trust with clients and make the transition, and the need for exit planning becomes obvious.
As a real estate agent or other small business owner, it may not take you that long to develop your plan. But whether you call it exit planning, succession planning, or having an exit strategy, it’s a given that it’ll take longer than you think. Listen to this episode and discover what Kris and Jeff suggest you need to consider, how to get started, and the steps that need to be taken.
- Having an exit plan helps ensure you maximize the value of your business.
- Regardless of the industry, creating a succession plan takes much longer than business owners anticipate.
- When you plan to sell a business that is embedded with relationships and high levels of trust between you and your clients, you want to do what’s best for them.
- If what makes your company successful is stored in your head, if there are things that only you know, make sure you have a way to pass them along.
Are you the key ingredient to your business’ secret sauce recipe? If you’re the sole source of knowledge, skills, systems, or technology that makes your business the success it is, then be sure you have a way to pass that information on to your successor.
You can find Jeff or Kris at www.integratedsuccession.com