Time frames are one of the most critical, challenging and frightening factors in planning your exit. At the same time, they are one of the most flexible factors in your plan. How can something be this important and still be fungible?
When we interview an owner, one of our first questions is about time frames. Note that they are plural. The first is when you want to step away from daily management of the business. The second is when you want to leave entirely.
Those questions also lead off our exit preparedness Assessment, the ExitMap®, and impact the scoring on many of the other responses. When it comes to actually implementing a plan, however, their importance is often the opposite of what you might expect.
Owners frequently are most concerned about the second question. Setting a date for leaving the business is scary. That is when their lives will change substantially. That is why good exit planners focus so much on the owner’s personal vision of life after the company.
The First Time Frame
It’s the other question about time frames that is more important. Stepping away from daily operations is hard. Letting other people make decisions is hard. Seeing people get excited about initiatives that aren’t yours is hard.
In my book Hunting in a Farmer’s World I discuss “taking off the Superman cape,” or the challenge of letting your employees go to someone else for answers. Once you get beyond that, running the business can be a lot more enjoyable.
So part of an owner’s fear regarding time frames is the fear of the unknown, the void that looms if you don’t have a post-exit plan. The other part is a fear of leaving the business just as it becomes a lot more fun.
In fact, I’ve seen a number of owners who, once relieved of the daily burden of being the answer man or woman, want to postpone their final exit date. That’s not surprising. You didn’t become a business owner because you thought you would hate it. In fact, owner burnout isn’t usually caused by the creative or innovative parts of an owner’s role. It’s caused by the tasks and workload of running things day in and day out.
Leave on Your Own Terms
That is why we design many exit plans with a kind of escape clause. Once the owner has transitioned his or her duties, most of the requirement for the second time frame have been met. At that point, the remaining criteria may be the accumulation of retirement funds, or accomplishment of a non-financial life goal (such as training for a new role.)
The final time frame is only met when the owner is ready. In an internal transition to family or employees that may involve selling a last bit of controlling equity.
Even if you are planning a third party sale, having your employee team spun up for an easy transition to a new owner will add considerable value to your company.
The goal in exit planning isn’t to set a departure date in concrete. It is to understand the time frame required to put you in a position to exit. The last move is up to you.
