Tips for Ensuring Business Continuity in Exit Planning

I have been helping a client with succession planning for the past three years and I tell you from experience, it's a process! Succession Planning is a business strategy that ensures operations continue smoothly after the leader transitions out of the business. So even if you're transitioning leadership to your children, give yourself five years to fully plan and prepare for it. Have a team to help you (including a corporate lawyer, financial advisor, CPA, succession planning advisor, valuation specialist, HR consultant). If you're thinking about exiting your business, here are some things to consider from a financial perspective: 1. The valuation of your business: a financial expert will assess your assets, liabilities, cash flow and potential for future earnings. 2. Current fiscal health of the business: The financial performance of the business directly impacts its valuation. Knowing fiscal health helps successors understand the true value of the business. 3. Your money team: Are the right accounting, financial and HR professionals in place to support the business even after you exit? 4. Ensure you have enough funds: Make sure you can cover the costs of exiting and retirement 5. Documentation - Make sure you have records of all financial policies, procedures and authorizations. 6. And, DEFINITELY have a fractional CFO on your leadership team to manage all of this as you move through this monumental moment in your life. Ready to talk with a CFO about succession planning? Schedule a financial consult at the link in the comments. . . #business #finance #smallbusiness #money

"My business is my retirement." You realize it's worthless right? Less than 1/3 of businesses ever sell. And you have NO succession plan. Yet you think someone will magically walk in the door with a check one day? Harsh truth: → Your business might be your life's work. → But to everyone else, it's just another asset. Your business is only worth what someone will stroke a check for it. → The market's flooded with businesses. → Buyers want turnkey opportunities. So, what's your REAL game plan? 1. Get clarity on the valuation Consider doing it like this: → 3-5 years of tax returns → Use a discounted cash flow model → Compare this to a multiple of EBIDTA This is the first thing we do for our business owner clients. We need to understand the true enterprise value and how it fits into the plan. 2. Build a succession plan → Groom a family member → Identify a key employee → Prepare for a sale You don't need to be dead-set on one of these. But you should have an idea in mind for at least one of them. 3. Assemble your dream team You can't go at this alone. Everyone you might need: → Exit planner → Accounting firm → Financial planner → Business attorney → Insurance advisor → Investment banker → Estate planning attorney Some of these roles can be done by 1 person. For example, we often play Exit and Financial planner, plus insurance advisor for our clients. The key is that they are all on the same page. 4. Diversify your retirement portfolio Your business can be a part of your retirement plan. But it shouldn't be the whole plan. Consider investing in: → Other businesses → Real estate → Stocks You need to acknowledge the risk that your business may not sell for what you think. All this to say... I understand where you are at. You've worked SO hard for your family. This business only proves that. But the stress is mounting. Your kids are never getting younger. You don't want to miss another soccer game. And you need a way out. You've always thought about planning. Now is the time. Need help figuring this out? Let's talk. My team has all the resources behind us to help you exit with clarity.

Recently, I've been engaged in a few formal and informal consulting projects. The most interesting have been focused on leadership succession and closely related preparation for potential ownership transitions. A couple of lessons that stand out from these projects: 1- If you are a business owner over 60, you must have a succession plan ASAP. A formal plan that can be implemented within two years and an emergency plan that can be implemented without notice were something to happen to you (you should have this emergency plan at any age). Stop whatever you are doing and get this process started tomorrow if you aren't prepared. 2- To maximize your business's potential valuation, you must operate like it is for sale for several years before going on the market. If you are operating a "lifestyle" business, stop and start running the business as if you had partners - controlling partners. Let your financial, legal, and accounting advisors help you align your financial structure with what will be expected. Get outside advisors if needed to help you get your organization structured in a less dependent way on you and your personality. Three years is the minimum window to operate with these changes before going to market to maximize your opportunity. These are both surprisingly hard things to do, yet some of the most important things you can do to get the highest return on your work, ensure your legacy, and make your business enduring. Don't delay.

Up to 83% of Baby Boomer Businesses are expected to sell or change hands in the next 5 years. What I'm hearing in conversations with these successful business owners is a great reminder that people still matter. In preparing for an exit strategy, making sure that the business goes to someone that will take care of the people and the legacy that they've worked hard to build is a top priority. Here Are 5 Way's Infinite CXO Can Help Your Business Plan & Execute A Prosperous Transition #1. Start Planning Now - to maximize your valuation and shape your desired outcome, it may take 3 to 5 years. Valuable opportunities to maximize your return need #exitplanning. Whether selling to an outside stakeholder, looking for a new Owner/Operator or handing it over to your family, planning is a winning formula. #2. Guide Your Successor - be flexible in your thinking about your extended role. The new owner or even someone internally will find immense value in your institutional knowledge. I'm seeing a lot of family handoffs where alignment and flexibility need to be laid out. #3. Don't Stop Growing - both the business and yourself. Companies are most attractive when there is a visible roadmap of growth. I recently heard a story of a 3rd Gen HVAC owner who let go of his employees to lower the expense on the P&L and show more profit. His business was now worth $0. #4. Culture Matters - to the value of your business. People just aren't an asset, their belief in your mission, vision and core values are. I recently had lunch with an owner of a Venture Capital Firm and he said the greatest mistake that VC partners made in the last 5 years was to not consider Culture as the pathway to sustainable growth. #5. Find a Partner - to be your guide. One that can not just help you sell but help you grow while you sell. Infinite CXO is helping companies just like yours strategize, plan and execute a prosperous exit. We aren't the only one's that can help you, there are other great companies out there. However it is our passion to Empower Hidden Potential. Make 2024 the year you build your #exitstrategy.