Business Exit Strategy for Planned and Unplanned Scenarios
Whether you are a business owner approaching retirement or just preparing for the future (planned or unplanned), it is critical to understand the intricacies of exit planning. Cummings Keegan helps business owners draft a carefully prepared strategy that ensures a smooth transition and secures the legacy of your enterprise.
Exit planning and succession strategy are complex and emotional topics for business owners. A “planned” exit depends on the owner’s readiness level to exit.
Considering that many exits are “forced”, and don’t occur on the owner’s terms or timelines, proper planning is crucial. A forced exit is often caused by disability, distress, disagreement, divorce, or death.
The Four Pillars of Business Exit Planning
At Cummings Keegan we use our four pillars of Launch, Grow, Evolve, Succeed to guide business owners through their business-owning journey.
A sound succession planning strategy begins on business day one. As you embrace the chaos associated with a new business, focus on the core functions that let you generate, track, and preserve cash. Establish KPIs and review your monthly financials. Build an advisory team to ride along on your ownership journey. These advisors will provide insight, challenge ideas, and recommend best practices. They will help identify speed bumps and celebrate your successes.
Implement foundational best practices so you begin to run the business as if it is for sale – even if it’s not. These best practices will create habits and behaviors to build on in the next phases. Form teams that fit your company’s culture and help you achieve goals. Focus on the organizational structure by clarifying roles and goals. Begin to define the business story by identifying its core values and your brand promise to your team and your clients. As your business value grows, the story can impact the overall valuation in a potential sale.
Making money can feel rewarding, but high sales are only one aspect of a successful business. Fundamental components like job descriptions, organizational charts, and policies and procedures guide the team, set boundaries, and help minimize risk. Consider contingency planning to document short-term strategies in the event of a business interruption. Your advisory team can be resourceful in sharing tools and resources for these scenarios. Become more analytical with your financial reporting. Use scenario-planning to aid in your decision-making. Learn how to manage and analyze data effectively as your company evolves.
Practice “letting go”. The earlier you plan for succession, the easier it is to practice this – and to adapt your plan if need be. Explore your options. Understand the various financial considerations dependent on your business structure. Utilize the 4-part action guide below to implement your strategy.
It’s never too early to develop a succession plan. Planning early ensures that you consider all options, prepare for the unexpected, and lay the groundwork for a smooth and successful transition to the next phase.
Why Choose Cummings Keegan for Business Transition Planning?
We Use a 4-Step Action Guide
Business exit planning is more than just a transactional event; it is an emotional process that requires careful consideration. Working with our experts means that you follow a detailed template prepared who understands the intricacies of the process. The plan works for every type of business, but the details and strategy will be uniquely yours. This action guide creates owner readiness for both the planned and unplanned scenarios.
1.Explore your options
In this step, you’ll explore life “after the business”, as well as the financial considerations available. Because timing is key, we’ll help you determine when to exit based on both personal readiness and market conditions.
2. Prepare the new leaders
Transferring your business involves careful consideration of several critical factors. First, you must identify a suitable successor who possesses both the financial capability to purchase the business and the necessary experience to manage it effectively. Additionally, you’ll need to consult with any other controlling shareholders and account for their interests in the transition plan.
3. Maintain Business Continuity
Business Continuity plans facilitate owner readiness because you develop short-term strategies to help ensure “business as usual” in the event of a business interruption. Have you considered the ‘what if’ scenarios or the possibility of a forced exit? According to the National State of Owner Readiness Report, 50% of all exits are forced, meaning they do not occur on the owner’s timeline or on their terms. These exits may have been results of the “5Ds”: death, disability, distress, disagreement, and divorce. It is crucial to set up a plan in case one of these “5Ds” affects your business.
4. Transfer the Power
Find projects to “let go” and allow the next leader to practice leading. This will build confidence for both you and the successor and highlight areas of development. Take active steps to finalize the transition and prepare yourself for the day that you meet your goal and hand over the keys.
We Maximize the Value of Your Business
One of the most important parts of your exit strategy is knowing the value of your business. At Cummings Keegan our CPAs are experts in analyzing financial information and industry trends. Let us help you optimize your business to get the most out of your sale when the time comes. Your business value is based on many factors including its financial health, market position, and benchmarks for future growth. These are what the future leader of your business will take into consideration when deciding to take over.
Clear Tax Planning
Cummings Keegan will help you develop strategies for your finances to ensure the long-term financial health of your business. Our CPAs will also help you structure your transition to minimize the tax implications for both you and your successor.
Business succession planning with Cummings Keegan can help you secure a more promising future today. Our CPAs will provide you with the expertise and guidance needed to navigate this complex process effectively and ride the emotional journey with confidence. Fill out the form below and get connected with the right expert for your business.