PREFER TO READ? Just below the timestamps you can!
Timestamps:
00:00 Introduction
00:47 Question 1: What is an Exit Plan?
01:37 Part 1: Creating Transferable Value in the Business
03:06 Part 2: Aligning Your Financial Goals
04:23 Part 3: Aligning Your Personal Goals
05:03 Question 2: Why do I need an Exit Plan?
06:17 Question 3: When do I need an Exit Plan?
So you know you’re going to exit your business someday and whether that’s on the top of your mind right now and it’s front and center or if it’s something that’s been on the back burner that you haven’t given much thought to, in either case, the question is how are you going to get from where you are today to having a successful exit in the future?
Today, we’re going to jump in and talk about exit planning because I often get these three questions: What is an exit plan? You know, why do I need an exit plan? And what are the benefits and when do I need an exit plan?Now that we know what we’re going to cover, let’s jump in.
What is an Exit Plan?
So the first question is what is an exit plan, and there are a lot of misconceptions out there. But what I most commonly hear is that an exit plan is something that I’m going to put together when I’m ready to sell my business. It’s gonna list out who I want to sell it to, how much I want to sell it for, and when I plan to be out. Although those things are true, it doesn’t necessarily mean that they’re the most important.
In my opinion, an exit plan is a plan that aligns your business, your personal, and your financial goals into a single strategy to build transferable value, secure your financial future, and allow you to focus on the things that are most important to you.
Creating Transferable Value in the Business
The first part of the exit plan is the business in creating transferable value. So, let’s take an example of two companies: Company A and Company B. Company A has a seamless process, it’s almost all automated, customers can order online, and they’re rarely late to any jobs. They rarely have any leftover concrete at the end of the day because of the efficiencies built in. Company B, on the other hand, operates less efficiently.
If both companies had the same profitability, which one would you want to buy? Most would choose Company A because of the efficiencies and transferable value it represents.
Aligning Your Financial Goals
Now that you understand the importance of creating transferable value in the business, let’s take a look at how we align our financial goals. The first thing we want to consider is determining your financial needs to maintain your current lifestyle without sacrificing your future.
Having a financial plan is essential as it shows you how to manage your income and prepare for your future. With this plan, you can calculate the financial gap between where you are now and where you need to be, allowing you to focus on growing your business value to bridge that gap.
Aligning Your Personal Goals
Once the business and finances are in order, it’s time to align your personal goals. Whether it’s traveling, pursuing hobbies, or supporting charities, having these goals in mind and working towards them intentionally can bring more satisfaction.
Why Do I need an Exit Plan?
So, why do you need an exit plan? There are numerous benefits, including improved business health, financial security, and peace of mind. It allows you to focus on growing your business and building wealth in an intentional way.
When Do I Need an Exit Plan?
Finally, when do you need an exit plan? The time to plan is now, regardless of how long you’ve been in business. Having a plan puts you in a better position for success when the day comes that you’re ready to exit.