Do you know how ready you are to exit your business?

September 13, 2023 -  By
(Illustration: siraanamwong/iStock / Getty Images Plus/Getty images)

(Illustration: siraanamwong/iStock / Getty Images Plus/Getty images)

Several years ago, a green industry business owner approached me and asked me if I would broker the sale of her business. She ran her business since high school and was tired of the daily challenges. She was excited about a new business idea she wanted to pursue after her exit. In a surprisingly short time, we completed the sale of her business. It was a cash transaction with no earnout. She was free to pursue her new business idea with no restrictions.

A few months later, the seller called me and asked me to join her for lunch. When we sat down, she said, “I wish I had never sold by business.” I didn’t know what to say. I was completely caught off guard. We ordered lunch and talked it through. In a nutshell, she wasn’t ready to exit. She only thought she was ready because of her emotional state at the time, but she didn’t fully consider all the implications.

It was an experience I’ll never forget because it opened my eyes to something beyond the transaction itself. Brokering a transaction may be financially lucrative for the broker, but if the outcome results in regret, the deal was unsuccessful in my book. Business succession is only successful if all parties involved are in a better place afterward.

Ready for the next chapter

When business owners consider their exit, they should truly understand if they are ready. It’s often a tough question to answer without some guidance. And if there isn’t sufficient forethought, exiting may lead to regret. In fact, many successful business owners regret how they exited their businesses because they weren’t ready. According to the Exit Planning Institute, 75 percent of business owners regret how they approached their exit.

So, what does it mean to be “ready?” Being ready to exit encompasses more than being emotionally ready. Being ready from a financial perspective involves understanding tax implications and future financial needs. Being ready involves preparing the organization for succession so the business continues to operate under new leadership. And being ready requires a thoughtful plan for what the owner’s life looks like after exiting. Being ready means having a succession plan in place.

Backed by data

Thankfully, there are resources to help business owners discover how ready they are to exit. One is a free 12-question online assessment called Personal Readiness to Exit Score (PREScore), available at PREScore uses an exclusive algorithm, developed by analyzing more than 40,000 business owners and conducting more than 200 in-depth interviews with owners recently selling their business to calculate readiness based on four key drivers of a satisfying exit. Your customized free report provides insight into at-risk areas overlooked and offers personalized recommendations for enhancing your succession plan.

I strongly encourage you to obtain your PREScore. There is no obligation. Just take the assessment, and you will get a customized report emailed to you. If you’d like to discuss the report with me, I’m happy to take the time to do so. The PREScore assessment helps you consider your level of preparedness so you can exit with no regrets when you’re ready. The report provides insight into unseen factors you may have overlooked. If not addressed, these factors may lead to regret and disappointment. By becoming aware of these considerations now, you will have time to address them.

This October, you will have an opportunity to learn about business valuation at my Equip Exposition session hosted by Landscape Management. If you can attend, you will leave this session with a solid understanding of valuation methods, a preliminary valuation of your company and action steps to take to move forward toward your exit.

Now go forth.

(The 2023 Equip Expo takes place Oct. 17-20 at the Kentucky Exposition Center in Louisville, Ky. To register for all Equip Expo educational sessions, you’ll first need to register to attend the show. Register for Equip Expo by following this link to get a 50 percent discount on your Equip Education registration. During the registration process, you’ll be prompted to add educational sessions.)

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