Exit planning doesn’t have to seem so complicated. I think many lawn and landscape business owners put off exit planning indefinitely because it seems too complicated and time consuming to deal with. It doesn’t have to be that way. We’ve devised a simplified model for exit planning for that may be helpful for some business owners in both understanding what exit planning is all about and in taking concrete steps toward developing their own exit plan.
In this model, there are four distinct steps in exit planning.
ONE – Understand what you have. If you are expecting to use the value of your business to finance your retirement or other future activities, you need to understand the value of your business. Very few business owners have a realistic view of the value of their businesses. You cannot rely on “rules of thumb” or what you may have heard another business sold for. Professional help is usually warranted. In addition to understanding the value of your business, it is important to understand the value of your other assets and liabilities and how they will affect your plans as well.
TWO –Understand what you need to achieve your objectives. This step requires you to consider what your future plans are, what the costs associated with those future plans will be, what your other resources are and what the gap between your requirements and resources looks like. You may be able to close that gap with the value of your business, developing other resources or adjusting your plans.
THREE – Plan to preserve and build the value of your business with its ultimate sale in mind. If you have a period of time before you want or need to exit your business ownership, there is an opportunity to take concrete steps to improve the value of your business. While you may focus on how to improve value, it is also important to take steps to preserve the value you have already created from unforeseen developments.
FOUR – Develop a plan to monetize to value of your business as far as possible on your timetable and on your terms. This might include a sale to a third-party, an employee, a family member or, perhaps an ESOP (Employee Stock Ownership Plan).
Exit planning is a process that continues from the present time, wherever you are on the business timeline, until its completion with the execution of your plan. Business situations change, personal circumstances and plans change, the economy changes. Exit plans will change as well and regular updating is a must for effective planning.
In most cases, those with a well thought-out exit plan will have a much better result over time than those who put the exit planning process off until sometime in the future.
About The Principium Group
The Principium Group provides services related to mergers & acquisitions exit planning and capital strategies to the green industry, including lawn, landscape and related businesses. Find them on the web at www.principiumgroup.com. If you are considering buying or selling a green industry business, we would be happy to discuss your situation on a confidential basis. Contact us here.