Exposing Reality and Execution in Planning Your Exit

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.

You can also take advantage of our FREE ExitMap® Assessment which will provide you with a 12-page report scoring you in these four key planning areas: Finance, Planning, Profit/Revenue, Operations. It will take about 15 minutes of your time and we do not ask for confidential information.

ennislp.com | email@ennislp.com | 301-859-0860

A Common Cold That's Double-Pneumonia

In a conversation with a friend who was asking about our business, I shared with him that business owners "don't know what they don't know" when it comes to planning a successful exit and how ignorance can result in either procrastination or no action at all until it's too late.  I went on to describe some of the severe financial and relational consequences due to inaction.

My friend's response was "That sounds like my brother who thought he had a cold but was diagnosed with double-pneumonia."  He went on to explain how family and friends were encouraging his brother to get to the doctor for a diagnosis but his brother "knew better" and continued to resist their strong exhortations.  He resisted until a few men that he worked with eventually took him to the hospital where he learned that he had double-pneumonia...which could have killed him.  He was in a coma for a month and ended up having to be in the hospital for almost two months.  Due to his lengthy stay in a hospital bed, he needed physical therapy to learn how to walk again. 

This gentleman was confident in his own diagnosis while what he did not know, that he had double-pneumonia, could have killed him.  With an early diagnosis, he could have avoided a near-death experience, a lengthy stay in the hospital, and weeks of physical therapy learning to walk again.

Business owners often "don't know what they don't know" as it pertains to planning their inevitable and eventual exit.  Professional Advisors often hear from owners, "I'm not ready to begin planning because I'm not ready to exit yet."  The owner may be aware of a "common cold" so to say, and not realize they're walking around with double pneumonia that could be disastrous for themselves, their family, their co-owners, and their employees. 

Don't be that business owner who isn't listening to Professional Advisors who are strongly encouraging you to get "diagnosed" NOW.  Listen to your advisors and act now to get an "exit readiness check-up" and create a plan before it's too late.  You may have double-pneumonia and don't know it. 

Get started today with this Free Exit Readiness Assessment.