You Need To Know...But Do You Want To Know?

Have you ever heard the old saying, “What you don’t know won’t hurt you”?  Not sure why, or who it was in my life at the time who would say it, but I remember hearing it a lot when I was a kid.  Through the years I’ve found this saying, through personal experience and observation, severely misleading at best.  I wonder if the person who originated the phrase had “current hurt” in mind.  For example, I might not know my car has no engine oil and that the engine is going to die exactly a week from today – but today, because I don’t know it, it doesn’t hurt.  However, in a week when the car blows up and catches on fire, there is a lot that’s going to hurt.  So, what you don’t know, can absolutely hurt you, and often does…it simply may not be immediate.

Or, how about this…”You know you need to know…but you don’t know because you don’t want to know.”  And, maybe you don’t want to know because it’s easier not to know.  In other words, “I know I need to know…but I really don’t want to know because it could be costly and/or inconvenient.  So, I choose not to know.”   In our "engine oil" example, perhaps I noticed oil stains in the driveway, so I knew that I should check to see if there was oil in the car, but I chose not to because I didn’t really want to know – because I didn’t want to invest the time and $$ needed to put oil in the car.  For now, it’s easier not to know.  What ends up happening in situations like this?  Instead of investing a few minutes and a few dollars to add oil…I end up having to invest much time and money arranging for a new engine or buying a new car.  If we choose not to get the knowledge we realize we need, it can be extremely expensive and even devastating.

If you’re a successful business owner, your business is probably your biggest asset, and will play a key role in whatever represents success for you in the future (i.e., financial, values-based, or legacy goals).  You may understand there are things you need to know about how ready you are, and how ready your business is for you to leave on your own terms and conditions and successfully – but you’ve chosen to this point not to know because of the potential for added work and the additional requirements of time and/or financial investment…and because “what you don’t know, currently isn’t hurting you.”  It may not hurt now, but the hurt that comes later could much greater when you eventually leave your business when your financial, values-based, and legacy goals are not realized. 

Take steps now to expose reality and get the knowledge you need pertaining to your personal and business readiness for exit and then act on it.  And get help...because you don't know what you don't know.  

An Accurate Financial GAP Analysis

An earlier post was titled "Meaningful Planning Requires Accurate Data" and stressed the importance of an accurate valuation of your business in planning a successful exit.  Once you have that number you will need to subtract it, along with the value of all other resources available to you today, from the resources you will need to achieve your goals. 

For example, let's say that your current personal financial plan, that includes all of your future goals, indicates you will need $5,000,000 to do all you want to do after you leave the business.  If the current value of your business is $2,500,000 and the value of all other assets is $1,000,000, then you have an "asset gap" of $1,500,000 ($5 mill - $3.5 mill = $1.5 mill).  

The reasons for ensuring an accurate gap analysis include:  

  • Provides you with a starting point and an end point needed for achieving your goals.
  • Serves as motivation for you to design and implement a plan to "close the gap" and increase the value of the business.
  • Where there is not an asset gap, you're afforded opportunities to increase goals, or possibly leave sooner than you were originally planning to.
  • An accurate gap analysis provides a more realistic view of your situation and how much still needs to happen, or doesn't need to happen, for you to accomplish your goals.

Steps to take for an accurate GAP Analysis:

If you need assistance, our firm can help you with all aspects of a GAP Analysis.  You may be surprised to hear that typically the most challenging, time-consuming, yet rewarding aspect of performing a GAP Analysis is establishing your post-exit goals and objectives.

The Exit Coach Radio Show

As a successful business owner, you and your business have a great impact on many people including your family, your employees and their families, customers, suppliers, vendors, your community and local economy.  When you eventually exit there is much at stake, but if you plan well your personal goals can be realized, and you can also help the many people who have come to depend on your business continue to flourish.  

I was grateful to be a guest recently on Bill Black's Exit Coach Radio show to discuss all that's at stake when an owner exits and some first steps you can take in planning a successful and responsible exit.  You can listen to the interview here:  Exit Coach Radio

We want to help you plan well for your exit so that you exit successfully.  Contact us at [email protected] if we can be of service.  You can also access online resources at exitreadiness.com