Step One: Establishing Owner Objectives
When a driver enters a race, he or she has one objective: to win. To do so, he or she must know what type of race
it is: a sprint or an endurance race? So too must business owners know what their objectives are. For example, is the
objective to transfer the company to a child or is it to leave with the biggest pile of cash possible? A winning
Exit Plan differs from owner to owner depending upon the three primary exit goals that every owner must establish.
Establishing these goals determines the owner's race strategy or Exit Plan. To establish your goals, we suggest
that you ask yourself three questions that, once answered, enable you to move forward decisively.
- When do I want to sell my business?
- What is the annual after-tax income I want after I sell my business?
- To whom do I want to transfer the business?
Owners also have secondary objectives that impact their Exit Planning choices. For example, one owner may want
his or her exit to benefit certain key employees while another may wish to pass wealth (with minimal tax consequences)
to family members.
Selling your business starts with a definition of what you want and need from the Exit Planning Process or, in
other words, what a successful exit from the business means to you. Determining what you want is the most important
step of the entire process. Be thoughtful. Take time to weigh various objectives. Work with your advisors. Your
financial or insurance advisor can easily provide computer projections (based on your financial statement) of your
financial needs after you exit your business. Your attorney or CPA may be helpful in developing your objectives
with you. But most of the effort expended in this step will be yours — after all; these are your Exit Objectives.
We encourage you to learn more about exit objectives by reading the materials listed below in Resources. You can
request these materials by contacting BEI.
Resources
The Inevitabilities White Paper - At some point, every owner leaves his or her business — voluntarily or
otherwise. This white paper discusses BEI's proven Seven Step Exit Planning Process™, which is designed to
maximize a business owner's financial and other goals.
The Exit Routes For Business Owners White Paper - When owners think about exiting their companies, the number of
exit routes might seem unending. In fact, there are only eight. This white paper describes a process that enables owners
to choose the best exit path for them.
The Completely Revised How To Run Your Business So You Can Leave It In Style Book - Using this book,
owners take control of their succession planning process. A step-by-step process that even the busiest owner can
master leads straight to ultimate success: reaping top dollar when you sell or transfer your business. Real life
case studies and progressive checklists show you how to:
- Create and preserve value within your business using tools you already have
- Transfer ownership and value as profitably as possible no matter who you plan to sell to
- Integrate personal, financial and estate planning goals with the goals of the business to maximize profit
and minimize tax liability.
The Exit Planning Review™ eNewsletter
The Bottom Line
Helping owners and their advisors to structure the Exit Plan is at the heart of what BEI is all about and it
begins with this step. Step One answers the question "what do I want?" The next step, Business Valuation
and Cash Flow (Step Two), answers the question "what do I have?" Failing to answer these questions before
proceeding with the Exit Planning Process causes delay and confusion because your planning has no direction (your
exit goals and objectives), and no grounding in reality (what do I have to attain my goals?)
Yogi Berra said: "You've got to be very careful if you don't know where you are going because you might not
get there."
Think about it.
Go to Step Two
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