Exit planning is a crucial element of success for any entrepreneur. Whether you’re ready to hand over the reigns of your business or are just beginning to think about your future with your company, it is important to devote serious consideration to your exit planning strategy. In today’s blog, we offer an overview on exit planning to help you begin preparing for your company’s future.
An Overview on Exit Planning
Why should I create an exit plan?
By designing and implementing a well-thought out exit plan, you are able to have control over how and when you exit your company, realize financial, personal, and business goals, maximize value while minimizing taxes, and ensure that your business is able to thrive long after you have departed. However, exit planning is not just important for when you inevitably leave your business: It also allows you to plan for contingencies to minimize the impact when something does not go according to plan.
When should I start designing an exit plan?
The earlier you start on your exit plan, the better off your company will be in the long run. In fact, in most cases you’ll want to begin thinking about your exit plan as soon as you start your business. You will inevitably leave your business at some point, whether it be due to retirement or to pursue other callings, so being aware of this fact early on and preparing accordingly will allow you to position your company in the most effective way possible.
Where do I begin?
The best place to begin planning your exit strategy is by crafting your personal vision. Start by thinking about what you want your life to be like after you have left your company and what your financial future will look like. Then you’ll need to create a comprehensive personal financial plan by building an overview of your financial picture, including your budget, income, assets, and liabilities. This will give you an idea of the income you will need after exiting your business, which will allow you to plan other logistics accordingly. Working with an experienced business advisor can prove invaluable during this process.
Once your financial picture has been put into place, you will need to begin planning out how you will build up a reservoir of cash that is not tied up in your business to support your future. Diversifying your wealth is a key component of building a stable future that you can depend on. Finally, you’ll need to create your continuation and succession plan. Developing, mentoring, and training your successor is a process that can take years so by beginning the process sooner rather than later, your business will be in the best possible position when you are finally ready to move on to your next steps in life.
For more in-depth information on exit planning, listen to our November 17th podcast with guest David Witherspoon of KatzAbosch Valuation Services.
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If you are interesting in taking your business to the next level then contact Allan Hirsh Advisors to learn how our exit planning services can help you hone your focus, plan for the future, and maybe achieve an AHA! Moment of your own! Tune into AHA! Business Radio Tuesdays from 6-7 pm EST on CBS Sports Radio, 1300 AM to keep up with the latest industry news. And don’t forget to follow Allan Hirsh Advisors on Facebook and Twitter too!