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Here’s Why You Should Care About Exit PlanningSubmitted by Mike Tarrant, CFP® on April 13th, 2018
I recently had the opportunity to participate in an event with other exit planning industry professionals in Atlanta.
Unfamiliar with the term exit planning? It is business strategy. It’s the process that drives sales and growth while enabling the owner to harvest the wealth of their largest asset.
Simply put, your business has no value if it’s not transferable. If your business is not attractive and sell-ready to a potential buyer, you have a lifestyle-supporting job.
On February 9, in partnership with the Exit Planning Institute, we offered an educational seminar for middle market business owners in Georgia to help them assess their readiness factor in planning to sell - or retire from – their businesses.
Many thanks to those who attended the EPI Owners Forum on February 9 with me!
A few months ago, we rolled out a survey – The State of Owner Readiness –that asked business owners key questions to help benchmark and educate them on the difference between ‘attractiveness’ versus ‘readiness’ when it comes to planning for the future.
Click here for full survey results.
Here are some key takeaways from the survey and seminar:
- 92% of owners surveyed agreed that having a transition strategy is important for both their future and the future of their business, BUT…
- 54% of owners surveyed have no plans in place to transition, and 53% of Georgia owners intend to transition over the next one to ten years.
- A business that is not ready to sell is not ready to be transferred successfully to children. It lacks the internal structure, strength, and marketability to thrive without the owner's presence.
- Baby Boomers age 54 to 72 own approximately 6 million businesses in the United States.
- A Value Creator is an independent business that can be readily transferred. It has higher Enterprise Value and can harvest more wealth for the owner.
- 75% of lower to Middle Market businesses are family-owned. Lower to Middle Market is defined as 5 million to 100 million dollars of gross revenue.
- 10 to 20% of businesses transition successfully to the Next Generation.
We are all human. We will all exit our businesses either by choice, on our own terms, or without much control over the outcome. In my experience, many owners do not plan for their third chapter.
What will you do when the time comes to exit your business? I love this quote from the book The Science of Getting Rich: “By thought the thing you want is brought to you; by action you receive it.”
My advice is simple: act now to set your business up for future success!
If you’re interested in continuing the conversation about exit planning, call my office at 770-353-6414 and we’ll set up a time to talk.
2018 Georgia State of Owner Readiness Report: https://ox242.infusionsoft.com/app/form/2018-georgia-state-of-owner-readiness-report
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