In a past post, we met an owner who told his advisors that he planned to leave his company not on a specific date but “in about five years.” Would it surprise you to learn that owners who pull “about X years” out of the air as their planned exit dates are always X years away from leaving?
X-year owners never engage or start the Exit Planning Process because the dates they pick have no particular meaning. Indeterminate dates are easy to ignore and certainly do not motivate action. This year’s 5-, 6-, or 10-year Exit Plan soon becomes next year’s 5-, 6-, or 10-year Exit Plan, and so on.
If advisors want to engage owners and help them exit their companies successfully (i.e., on their terms), they must help them transform indeterminate goals into actionable goals. Unless they do, owners can (and usually do) continue to float along, doing nothing, because nothing is required.
Until an owner’s goals are actionable, advisors cannot help them plan. This article is all about untying advisors’ hands and converting fuzzy goals into SMART ones.
The Characteristics of Actionable Goals
The trouble with not having a goal is that you can spend your life running up and down the field and never score. Bill Copeland
Actionable goals are SMART, an acronym that Peter Drucker used for goal creation. SMART goals are:
Exit Planning Advisors use the SMART model to assess whether an owner’s exit goals are actionable.
A target exit date of “about five years from now” is not specific. June 1, 2023, is.
If a goal is to be actionable, we can gauge how close, or far, we are from achieving it. In measuring progress toward the goal, both owners and advisors have a single focus and can make course corrections, as needed.
In the context of Exit Planning, accuracy means that advisors do not accept owners’ assumptions of their income goals (or assertions of any non-expert’s opinion, for that matter) at face value.
Are the goals feasible? Does the owner and business have the capability and resources to achieve the goal within the time allowed?
Actionable goals have deadlines for completion. Without a time frame, advisors can’t measure performance or hold owners, management, and other advisors accountable. Deadlines demand performance.
Without actionable goals, neither advisors nor owners can develop actionable Exit Plans because, as we saw with the five-years-from-now departure date, planning cannot start. The same is true of the post-exit income goal. Both goals must be specific, measurable, attainable, realistic, and time-limited.
In our next post, we’ll look in more detail at how SMART goals affect the Exit Planning Process.
- “Leave in five years” is a fuzzy goal. “Leave on June 1, 2023” is SMART. A date is a line in the sand, not a vapor trail in the sky.
- Using SMART as the standard for exit goals prevents owners from putting off the hard work of creating transferable business value once we’ve determined the resources needed to attain those goals. We’ll discuss that topic in the next post.
- Explaining the benefits to owners of setting SMART goals (and how advisors can help them do so) positions advisors to lead the charge to achieve them.