5 Exit Planning Benefits That Have Nothing To Do With Exiting the Business
Undertaking exit planning for tomorrow almost always leads to a more valuable business today. The top 5 benefits include:
1. Accurate Capacity Assessment
Taking the time to evaluate critical business aspects (systems, strategy, staffing, skills, structure, style, shared values) allows owners to engage in gap analysis and proactively develop an action plan for building critical capacity that will allow the business to achieve its goals more effectively and efficiently in the near term while making it more attractive to potential buyers in the long-term.
2. Business Process Improvement (BPI)
Many times SMEs operate with a considerable amount of tacit knowledge where people “just know how to get stuff done”. There have been client cases where something as fundamental as pricing is left at the tacit level leading to high degrees of variability. Formalizing tacit processes in the near term often brings increased bottom line ROI and in the long term, provide confidence for buyers that they can step in and operate the business successfully from day one.
3. Staff Development
Going through the organizational development process associated with exit planning and preparedness affords a natural opportunity to develop a robust staff and augment where necessary with outside skill. Increasing staff capacity (skill, ability, and efficiency) and improving management skill leads to increased organizational performance in the near term. In the long-term, potential buyers see increased value in businesses with well-trained, tenured, capable staff.
4. Increased Organizational Effectiveness
Both BPI and staff development efforts tend to drive increased effectiveness across the business and the result in realized in improved margins. In the short-term SME owners are able to realize increased effectiveness and profitability with leads to a greater ability to attract the right buyer at the right price in the long-term.
5. Improved Financial Understanding
One of the most powerful components of a planning process is the development of a fine tuned financial understanding of the business. Understanding where the business makes (and/or loses) money; how it maximizes its cash flow and/or uses credit more efficiently; fine tuning financial aspects of the supply chain; shortening receivable collection times and/or more effectively managing customer credit lines; and the potential list of gains in this area continues leading to improved management information in the near-term and increased attractiveness to buyers in the long-term.
A famous Dwight D. Eisenhower quotation sums up the benefits of transition planning well: “Plans are worthless; planning is everything”. We acknowledge that very little planning comes to fruition precisely as designed, but most business experts and consultants would agree that planning is critical for success. Unfortunately, few small to medium (SME) business owners are afforded the luxury of a robust and systematic planning processes that helps them rise above the tyranny of the urgent working in the business to work on the business. Yet, once SME owners engage in this process they nearly always reap significant and immediate improvement of their bottom line… and that is long before they need to make the business attractive to a buyer so they can exit.
The Plan For Transition online assessment is designed as an accessible first step for busy SME owners to make efficient and effective progress toward their goal. Upon completion of this online tool (about 90 minutes) the business owner has a clear snapshot of their transition aspirations and their current reality (including business health, leadership, market forces and financials). This provides a basis for determining a pathway forward. The online assessment includes 15-minutes of free one-to-one coaching to help make the pathway and potential next steps a little clearer.