For most owners, their business is their largest asset by far, and not properly planning for its transfer can put them, and their employees and family members at risk. Being prepared is the key to success. It starts with educating yourself about your exit options well in advance, seeking the best advice, and creating a Business Ownership Transition Plan (BOTP).
A BOTP is a comprehensive written document that outlines how and when the ownership of a business will be transferred to others, either internally or externally, in order to achieve your long-term financial and personal goals.
The best way to maximize your business value, as well as increase the likelihood for a successful ownership transition, is to be prepared. When done correctly, exit planning aligns your goals and objectives with the best sale or transfer options and provides a comprehensive roadmap to a successful outcome. This cannot be achieved by addressing revenues or profits alone, and it is not something achieved through luck or chance. It is achieved through careful planning and preparation well in advance.
As a business owner, you are unique – your situation, circumstances, challenges, goals, and objectives are all specific to you. That’s why when it’s time to transfer the ownership of your business to someone else, the exit planning process should take all of this into account.
Why plan in advance for the transition?
Simply put, planning in advance will allow you to positively affect the outcome. Preparing for ownership transitions takes time. Specifically, a plan will allow you to:
- Ensure that your goals are met
- Determine how much growth will be necessary to meet your financial goals
- Maximize the value of your business
- Groom others to assume leadership positions
- Protect both business and personal wealth that is accumulating as you grow
- Determine which options are likely to meet your goals
- React to unsolicited offers appropriately
- Act when the time is right for going to market
- Minimize taxes
- Gain peace of mind
With proper exit planning, you will be prepared for an unexpected exit and enjoy the next (and hopefully best) phase of your life!
We’ll be delving into each one of the 10 benefits of exit planning over the next couple of weeks, so stay tuned!
Tired and looking for the way out?
Join BTA’s FREE membership to gain access to our Transition Readiness Assessment which will help you determine how ready you are to exit or transfer the ownership of your business to others. You will also receive a FREE Introductory Course and an electronic version of our book Cashing Out of Your Business – Your Last Great Deal.