Follow Dallas Linkedin
Email Dallas Email
Financial
Oct 17, 2016

First Things First: Prioritize Your Objectives

Sponsored Content provided by Dallas Romanowski - Managing Partner, Cornerstone Business Advisors

You've got to be very careful if you don't know where you're going, because you might not get there. — Yogi Berra

It is not always easy to interpret Yogi. In this case, perhaps he is advising you to figure out just where you are headed in your business.

As you near the time when you will leave behind the daily worries and stresses of business ownership, have you defined your successful exit? Do you know where “there” is, much less how to get there?

Unless you set and prioritize your exit goals or objectives, you may have too many, or they might conflict, but in either case you may not make much headway.

The clearest example of a failure to set objectives may be Bill Wilson, a business owner who recently told us that he wanted:

  • To leave his business within three years (although he was ready to leave right away)
  • Financial security, defined as a seamless continuation of his current lifestyle
  • To transfer the business to his management team
A quick review of Bill's personal financial statement, however, revealed that most of the income required to maintain his lifestyle would have to come from the business. Unfortunately, his business wasn’t large enough to attract a cash buyer.

And, since Bill had done no exit planning, his employees had no funds with which to purchase his ownership interest. A long term installment note seemed to be the only answer - a risk Bill was unwilling to take.

Contrast this unpalatable solution with Bill's objectives, objectives which could have been achieved had he taken the time - long before he wanted to leave the business - to establish and to prioritize his exit objectives.

If, for example, an owner’s need for financial security prevails, selling a business to a third party for cash may be the best and quickest exit path.

If, however, attracting a qualified third party is unlikely or undesirable, an owner may need more time to devise and implement a transfer to one or more insiders (children or employees) that provides the owner adequate cash.

On the other hand, if an owner’s desire to transfer the business to a specific person or group trumps his need for financial security, and his deadline for departure draws near, financial security in the form of "up-front" cash must take a backseat.

As you can see, owners must consider - simultaneously - the three primary exit goals, which are listed below. Ask yourself which of the three is your most important exit objective and rank your answers from 1 (most important) to 3 (least important).

Financial security
1          2          3

Transferring the business to the person of my choice (may include key employees, co-owner or child)
1          2          3

Leaving the business when I want (could be immediately or never)
1          2          3

Prioritizing your objectives will help you choose your overall path and design your exit plan. For example, if you want out soon, and with cash, but your business cannot be sold today, do you wait until market conditions improve or sell now to your employees?

While prioritizing your objectives is not easy, doing so gives you a framework for decision making.

Start with the choices and priorities in the exercise above but if you have any difficulty, we can ask you some additional questions to help you make your selections. When combined with an overview of some critical facts about you and your business, the exit planning solutions begin to crystalize. 

While we don’t have a ready-made exit planning package ready for you, we do have the background and the exit planning process we believe will shine a spotlight on the solutions that are best for you. 

We’d like to sit down to talk with you about it sooner rather than later.  Gathering your exit planning resources today can help you confirm your path to the future.

© Copyright 2016 Business Enterprise Institute, Inc. All Rights Reserved.
 

The Cornerstone team includes former C-Level executives, successful entrepreneurs and advisers who offer unmatched experience in delivering advanced, custom-tailored, results-oriented solutions for business leaders. As a member of the Business Enterprise Institute (BEI), Cornerstone is an authorized distributor of BEI’s content and Exit Planning Tools. We developed the Performance Culture System™ to help clients implement best practices and drive high performance throughout their organization. For more information, visit www.launchgrowexit.com, call (910) 681-1420 or email [email protected].
 

 


 

Other Posts from Dallas Romanowski

Bizjournalblockad
Ico insights

INSIGHTS

SPONSORS' CONTENT
Jim ellis headshot 10311631058

User-Centered Design Playbook: A Case Study

Jim Ellis - Signal
Aaeaaqaaaaaaaaidaaaajdhiztrkodm0lte2yjetngrkmy1hotrmltawmdvlmwqyztmymw

Understanding the AI Ladder

Diane Durance - UNCW Center for Innovation and Entrepreneurship
Nealjohnson 12191614553

Add Value to Your Home with a Fire Pit

Neal Johnson - Network Real Estate

Trending News

Flooding Looms Along Water Street In Downtown Wilmington

Christina Haley O'Neal - Sep 24, 2018

Open For Business: New Announcements (Sept. 24)

Johanna Cano - Sep 24, 2018

At UNCW, Crews Clean, Repair As Officials Plan For Return Of Employees, Students

Cece Nunn - Sep 24, 2018

In The Current Issue

Scenes From Hurricane Florence

Images from the area ahead of and in the aftermath of Hurricane Florence....


Investing In Affordable Housing

A recent high-dollar deal in Wilmington represents not only a little more affordable housing in the city but also a good investment for the...


State Releases Visitor Spending Data

Visitor spending increased in Pender County for 2017, with a growth rate that outpaced Brunswick and New Hanover counties, and even the stat...

Book On Business

The 2018 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2018 Power Breakfast - Dishing on the Restaurant Biz
2018 WilmingtonBiz Expo - Keynote Lunch with Eric Dinenberg, Rouse Properties
2017 Health Care Heroes