I am speculating that a good number of the readers of this site who are business owners already recognise the benefits of a Business Exit Plan or a Sucession Plan. Oddly, the creation of either of these plans is still only a stepping stone towards actually achieving a successful business exit or succession.
The key element of achieving a successful business exit or succession is actually IMPLEMENTING THE PLAN!!
Below I have featured an article by Bob Brown focusing on this in part. Bob talks in general terms about the requirements for achieving a successful exit or succession, and then makes a great point: “One of the major reasons for exit strategy failure is due to changes in the economic and business climate that have not been anticipated or accounted for in the objectives of the exit plan.” His advice – get some help!! And why wouldn’t you?!
“Fact – Most Exit Strategies Fail
Studies show that most family-owned businesses do not achieve the anticipated or desired results from their exit strategies. No matter what their method of exit, be it succession, management buy-in, or management buy-out, they build a (seemingly) solid exit strategy only to discover that it does not reflect reality for one reason or another.
The reason for this?
Many exit strategies resemble more of a wish list than that of a realistic plan. People’s emotional attachment to their business means they feel it is worth more than it actually is. Using external professionals and consultants can therefore help to inject a sense of objectivity into the valuation and planning process, ensuring that goals/objectives remain within the realms of reality.
Aside from the fact that business owners can often overvalue their companies, there is also an issue with flexibility in most exit plans. Too many exit plans are rigid and inflexible; they do not sufficiently allow for unexpected changes in the economic climate, the industry, or within the business itself.
You MUST be prepared to alter and re-work your exit plan as time goes by to ensure that it remains achievable. One of the major reasons for exit strategy failure is due to changes in the economic and business climate that have not been anticipated or accounted for in the objectives of the exit plan.
This is another good reason to bring an external professional or consultant on-board during the exit planning and implementation process. Professionals and consultants can help to tweak your exit plan according to market and industry conditions, or changes that occur within the business itself. Their objectivity, once again, also helps in that goals realistically reflect the conditions surrounding the business – not goals simply linked to what the business owner(s) would like to achieve.
See, the concept of failure is a product of predetermined goals and objectives. When you read the title of this article, it would have been reasonable for you to assume that by ‘fail’ we implied that exit strategies are the cause of this ‘failure’. When, in fact, it is simply the case that exit strategies ‘set the goalposts’ for success or failure during business exit.
So, in essence, business owners are failing themselves, by setting standards too high and expecting too much from their exit strategies. That’s why it’s a good idea to bring in a professional or a consultant, to ensure that you – as a business owner – keep both feet firmly on the ground during the exit planning process, and also during the plan’s implementation stages.”