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

Why Your Company Needs a Corporate Video

Jim Ellis - Signal
Lgoriginalheadshot 311794626

Summer is the New Holidaze

Laura Bransfield - Summerfield Custom Wellness
Headshot bmcgreal

One Size Does Not Fit All for Today’s Student

Brittany Hays McGreal - North Carolina Wesleyan

Trending News

A First Look At The Next Phase Of Autumn Hall

Cece Nunn - Feb 14, 2019

Local Retailer Meadowlark Plans Move In March

Christina Haley O'Neal - Feb 14, 2019

Family-owned Artisan Market Planned For Third Street Property

Christina Haley O'Neal - Feb 15, 2019

More Medical Space Coming To Leland Area

Cece Nunn - Feb 15, 2019

Changing Tides

Laura Moore - Feb 15, 2019

In The Current Issue

Navy Week To Coincide With Azalea Festival

The U.S. Navy is coming to the Port City this spring, coinciding with the N.C. Azalea Festival. Wilmington is among the 14 selected sites –...



Housing Market: When History's For Sale

Homebuyers in the market for a historical dwelling seem to have at least one thing in common: a love of storied structures, big or small....

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

Health Care Heroes 2018
2018 WilmingtonBiz Expo - Keynote Lunch with Eric Dinenberg, Rouse Properties