A business book that I read the book when it was first published, and find helpful to revisit regularly, is Execution: The Discipline of Getting Things Done by Larry Bossidy and Ram Charan. The authors’ definition of “execution” is particularly insightful and helpful when considering how an owner should build a business that is transferable, and in planning their eventual exit from the business
“Fundamentally, execution is the discipline of systematically exposing reality and acting on it.”
Successful business owners understand that they need to be personally and deeply involved in facing reality, and they are systematic in exposing it. They understand that execution is essential in closing the gap between desired results and current reality, and consider the discipline of execution as being their major responsibility.
However, In helping business owners plan for their exit, we observe a consistent pattern of misperceptions and lack of intent in exposing reality. Common misperceptions include:
Overestimating the sellable value of their business
Underestimating how much $$$$ they will need or want after they leave the business
Overestimating the rate of return they will receive on invested assets
Underestimating the impact of taxes on sale proceeds
Overestimating their personal and business readiness for a successful exit
Underestimating how long it takes to prepare for a successful exit
When owners don’t systematically expose reality in planning for their exit, there is much at stake including their personal goals and objectives and financial future. We like to say that “meaningful planning requires accurate data.”
So, begin now identifying the gap between your desired exit results and your current reality. Following are a few steps you can take to get started:
First, get skilled help with clarifying your desired results: When do you want to exit? To whom do you want to sell/transfer the business? Any values-based or legacy goals?
Have a valuation professional quantify the sellable value of your business.
Have your financial advisor perform a current financial needs analysis using the estimate of business valuation in their calculation.
