No Time Like the Present: Defining a Vision for Your Exit Strategy
When you spend most of your time dealing with the daily ins and outs of being a small business owner, it’s perilously easy to forget that, someday, you’ll step away from the helm and move into the next phase of your life. Whether that day is decades away or just around the corner, the reality is that an eventual transition is inevitable, and your choices now determine the scope of your options when that time comes.
Defining a vision for your exit strategy can feel a lot like planning for some far-off day in the future. In reality, it’s about ensuring that all the sacrifices you’ve poured into your business over the years translate into a legacy or lifestyle that aligns with your aspirations. It should act like a compass that guides your day-to-day decisions in pursuit of your long-term goals.
In today’s entry of our “Want to Start 2025 on the Right Foot?” series, we’ll help you clarify what success looks like when it’s time to step away so you can make strategic choices that pave the way for a fulfilling transition.
What Does “Vision” Mean in an Exit Strategy
Before we start fleshing out your vision, let’s first define it in the context of an exit strategy:
It’s your roadmap for what’s next, both for you and the business you’ve built. It should consider personal and professional variables: Align the professional measures you take over the life of your business to achieve the personal outcome you want after transitioning out of your current role.
Why Does Having a Vision Matter?
Let’s briefly go back to the idea that some business owners find it pointless or difficult to think about what they want personally and professionally when they don’t think they’ll be transitioning anytime soon.
However, there are countless scenarios where a) you find yourself in a position forcing you to exit sooner than expected, or b) you’re ready to transition mentally but have done little to maximize your chances for success.
Scenario A: The Sudden Exit
Maybe you plan to run your business for another decade or longer, so you believe there’s plenty of time to think about your exit strategy down the road. Then, something unexpected happens. It could be something wonderful, like the birth of your first grandchild, making you realize you want to spend more time with family. Or it could be something difficult, like a sudden illness, an accident, or an unforeseen financial obligation that forces you to step away earlier than expected.
Without a clear vision, you’re suddenly in crisis mode, making major decisions under immense pressure. Instead of a carefully thought-out transition, you find yourself scrambling to figure out what to do next.
Want to sell your business? Because you haven’t planned ahead, you might not have the time to vet potential buyers thoroughly and end up selling to someone whose values don’t align with yours.
Hope to pass the business on to a family member? Without years devoted to developing their leadership skills, the heir you envisioned could lead to the eventual collapse of a business you worked so hard to build.
Scenario B: The Missed Opportunity
Consider a different scenario: you wake up one day and realize you’re ready to move on. You’re ready to enjoy the freedom of retirement, and selling your business will fund those golden years.
Unfortunately, if you haven’t reached this phase of your life with a vision for your exit strategy, that probably means you haven’t taken the steps to increase your business’s value over time.
When the offers start rolling in, they don’t even come close to reflecting the potential of your business, nor are they big enough to live comfortably on. In fact, the buyers are expecting you to sell for far below the market price for similar companies in your industry, claiming that they’ll have to invest more money into making the venture competitive before they can turn a profit.
Instead of retiring, you’re faced with a frustrating reality: either accept less than your business is worth or delay your plans while you try to make up for years of lost time.
How to Start Defining a Vision for Your Exit Strategy
To avoid these outcomes, you must start planning for your future as soon as possible.
However, we understand that envisioning your exit strategy isn’t easy, especially if this is the first time you’ve considered it something to spend time on. We’ve created a few prompts to help you reflect on the personal, professional, and practical aspects of a successful exit:
Personal Vision: What Do You Want for Yourself?
- What does your ideal life look like after stepping away?
- How much financial security will you need to support your goals?
- Do you want to retire completely or see yourself pursuing a future venture?
- Are there specific milestones you want to hit before transitioning, such as paying off a mortgage or funding your children’s education?
Professional Vision: What Do You Want for Your Business?
- Do you want the business to stay in the family or pass to a specific successor?
- Would you prefer to sell to an external buyer? If so, what qualities are you looking for in that buyer?
- How interested are your employees in continuing their current role under new ownership? What expectations do they have for a new owner that would keep them in the business?
- Is it important that the new owner continues in any particular community or customer commitment? If so, have you discussed these commitments with stakeholders?
Practical Vision: How Will You Get There?
- When do you realistically want to exit?
- Are there gaps in the business that need to be addressed before you transition? Consider things like whether you operate under the hub-and-spoke model, how well-trained your successors are, etc.
- What’s your target valuation for the business?
- Have you created a list of milestones that you have to achieve between now and the time you hope to transition?
- Does anyone on your team, such as co-owners or successors, need to be as involved with and aware of your exit strategy as you are?
You Don’t Have to Build Your Vision Alone
The sooner you start defining a vision for your exit strategy, the more opportunities you have to align your daily decisions with the bigger picture.
And, even if you think that you’re set for the future, ask yourself these questions:
- Are you actively working on your business, not just in it?
- Do you take the time to step back, gain perspective, and evaluate where your business is heading?
If the answer is no, it might be time to bring in someone who can hold you accountable and help push you out of your comfort zone. You need a guide who understands the challenges you’re facing and can empathize with the demands of running a business—someone like Lori Moen.
As a Certified Exit Planning Advisor, Lori works with business owners to ensure that each day spent in your business moves you closer to realizing the future you’ve worked so hard to achieve. She’s here to help you connect your daily actions with your long-term vision so that you’re ready to enjoy the fruits of your labor when the time comes.
