Follow Dallas Linkedin
Email Dallas Email
Financial
Jan 16, 2017

Selecting Your Exit Goals

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

When a man does not know which harbor he is heading for, no wind is the right wind. – Seneca

The starting point for any type of plan is defining its goals. In the case of planning a business exit, this means knowing what it means to exit your business in style.

Philosophers, business owners and successful people from all walks of life understand the critical importance of establishing goals, creating plans to attain those goals and persevering to see their plans through to completion.

Having worked with owners to create successful exit plans, we know it is critical for owners to ask several questions to establish three principal exit objectives before moving forward with their exit plan.

How much cash do they need when they exit to support the lifestyle they desire?

Do they want to be cashed out when they leave the business or are they willing to receive the purchase price over time?

When do they want to leave the company?

How much longer are they willing to remain active in the company?

To whom do they want to sell/transfer the company?

To a child? Key employee? Co-owner? An outside party that can pay top dollar?

Let’s look at an example of an owner who arrived at his exit date without a plan to reach his goals, as told by an exit planning advisor:

Ben, the owner of a plastic-extrusion company with 45 employees, had long thought of transferring his business to a son  
and a key employee but had done little to prepare for that transfer.

However, as tougher economic conditions challenged his company and he reached his 58th birthday, he decided it was time to retire and called me.

I said: “Ben, it’s helpful that you’ve established two of the three exit objectives critical to all successful business exits. You’ve determined that you don’t want to work much longer in the business, and you’ve decided that you want to transfer the business to your son and a key employee. But what about the third exit objective: How much money do you want or need when you leave the business? Have you determined whether you need cash or can accept a promissory note?”

At this point, Ben had two choices:
  • He could retire immediately and try to sell the company for cash, but not to his son and key employee. They had no cash, and no bank would lend an amount even close to that necessary to close the deal. If Ben wanted to sell today and receive an amount that would support his post-exit lifestyle, he would have to sell to an outside third party with sufficient cash.
  • Ben could sell the company to his son and key employee but would have to wait six to 10 years to receive the entire purchase price, which was not guaranteed.
Ben’s situation illustrates why setting objectives or goals (and understanding how each affects other objectives and goals, creating a plan and acting to reach those goals is critical to a successful exit.

If you prefer to leave your business in style - which to us means leaving your business to the successor you choose, at the time you choose and with the amount of cash you desire - you must take time to formulate specific, consistent, attainable goals and objectives.

You must determine a course of action - a plan - based on those goals, and you must persevere with that action until you achieve your goal. Without setting goals at the outset of your exit journey, you may drift aimlessly until, like Ben, it’s too late.

Don’t be an owner who is too busy working in your company to work on the most important financial event of your business life. We are happy to help you begin by providing you with more information about setting objectives and other exit planning topics.

© 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
Headshots march websized 2

How to Prepare Your Commercial Roof for Cooler Weather

David Grandey - Highland Roofing Company
Natalieenglish headshot

Becoming a Breakout City: Bring on the Remote Workers

Natalie English - Wilmington Chamber of Commerce
Headshot1 2162265156

The Guiding Principles of a Credit Union

Sarah Stone - Excite Credit Union

Trending News

New Standalone Spot In Works After Hwy 55 Closure

Miriah Hamrick - Oct 5, 2022

New Ice Cream Shop Comes To Leland

Justin Williams Pope - Oct 5, 2022

Wilmington Health Appoints Chief Development Officer

Staff Reports - Oct 4, 2022

County Nabs Holly Shelter Business Park Land Donation

Johanna F. Still - Oct 4, 2022

Courtyard Café Opens In The Cotton Exchange

Elizabeth White - Oct 5, 2022

In The Current Issue

Spotlighting This Year’s MADE Awards

Each year, the MADE Awards program brings attention to manufacturers and makers in the Cape Fear region....


MADE Winner: Exporter Category

The Exporter Category winner doesn't just hammer its products home....


Upscale Greek Food On The Menu

“These techniques have been used through the centuries. Braising lets the ingredients shine. You cook the food slowly at low heat, and that...

Book On Business

The 2022 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

Trying to Grow a Business?
2020 Health Care Heroes
2020 WilmingtonBiz 100