- \n
- a blank stare, or<\/li>\n
- \u201cI\u2019ll work another 5-10 years and call it quits.\u201d(If you ask this person again in another 5-10 years, you\u2019ll likely get the same answer<\/li>\n<\/ul>\n<\/ul>\n
<\/p>\n
The bottom line is the same \u2013 most business owners lack a plan for leaving their business<\/strong>.\u00a0In this article, we’ll describe what an effective exit plan looks like.<\/p>\n
<\/p>\n
<\/p>\n
The Purpose of the Exit Plan: Get from Point A to Point B<\/h2>\n
<\/p>\n
<\/p>\n
It\u2019s a mistake to assume that pure organic growth will get you or your business where they need to be when you exit the business.<\/strong> Sometimes, that just isn\u2019t possible. Relying on organic growth alone to grow your business might take 100 years, and you just don\u2019t have that kind of time.<\/p>\n
<\/p>\n
<\/p>\n
To avoid this mistake, you need an effective exit plan. This plan includes:<\/p>\n
<\/p>\n
- \n
- Data and metrics that define Point A<\/strong> \u2013 your current status<\/strong> (both personally and in the business<\/li>\n
- Data and metrics that define Point B<\/strong> \u2013 <\/span>where you need to be<\/strong> to exit<\/span><\/li>\n
- A measurable and achievable plan to get from point A to B\u00a0<\/strong><\/li>\n<\/ol>\n<\/ol>\n
- \n
- Estimate your annual expenses.<\/li>\n
- Forecast the total amount you need based on your lifespan<\/li>\n
- Establish a budget that you must fund<\/li>\n
- Look at all of your financial assets, from the business to 401ks to stocks to real estate investments, and determine how to make them support you.<\/li>\n
- Identify how much you need out of your business and a reasonable time frame to reach that goal.<\/li>\n<\/ul>\n<\/ul>\n
Point A \u2013 Where Are You Today?<\/h3>\n
<\/p>\n
<\/p>\n
Next, you must accurately assess your current situation \u2013 point A. You can\u2019t create an effective exit plan without knowing the gap between where you are and where you want to be. Business owners frequently overestimate what their business is actually worth and underestimate how ready it is to sell. Getting real <\/em>information is critical if you want to exit successfully.<\/p>\n
<\/p>\n
<\/p>\n
As Certified Exit Planning Advisors, we assess where your business is today, asking questions including:<\/p>\n
<\/p>\n
- \n
- Is it possible to determine a value of the business, and if so, what is that value?<\/li>\n
- How ready is it to sell?<\/li>\n
- What are the strengths and opportunities? How do we quantify these?<\/li>\n
- What are the weaknesses and threats? How do we quantify these?<\/li>\n<\/ul>\n<\/ul>\n
The Effective Exit Plan<\/span><\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
The answers to the questions above are essential to defining exactly what\u2019s needed to increase and maintain the value of your business at the level you need. \u00a0As the Exit Planning Institute says, you must “know your gaps” (view\/print their PDF here or by clicking the image<\/a>) before you can fill them. Something is missing between Point A and Point B; an effective exit plan spells out how to fill those gaps and reach your successful exit.<\/p>\n
<\/p>\n
<\/p>\n
Lorne Greenfield, CEPA and founder of Capital Concepts, says, “Exit Plans are highly customized because each business and situation is\u00a0different. They include a readiness assessment to define deficiencies and what needs to be shored up to ensure the best possible value.\u201d<\/em><\/p>\n
<\/p>\n
<\/p>\n
Contents of an Effective Exit Plan<\/h2>\n
<\/p>\n
<\/p>\n
Your exit plan will detail how to improve your profit margins dramatically, make your business function without you, and demonstrate consistent performance. Steps might include:<\/p>\n
<\/p>\n
- \n
- Documenting processes<\/li>\n
- Finding and fixing inefficiencies<\/li>\n
- Helping you find the right people for the work needed<\/li>\n
- Creating predictable sales and pricing models<\/li>\n
- Getting your books current<\/li>\n
- Finding capital to smooth out cash flow and invest in improvements<\/li>\n
- Holding teams accountable for reaching goals<\/li>\n<\/ul>\n<\/ul>\n
In our next several articles, we\u2019ll discuss how to determine the value of a business, improve that value, and get the highest value from your business when you exit.<\/p>\n
<\/p>\n
<\/p>\n
Have you read our previous articles in this series on Exit Planning?<\/em><\/p>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/p>[\/et_pb_text][et_pb_post_nav _builder_version=”4.27.2″ _module_preset=”default” in_same_term=”on” hover_enabled=”0″ sticky_enabled=”0″][\/et_pb_post_nav][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.27.2″ _module_preset=”default”][et_pb_column _builder_version=”4.27.2″ _module_preset=”default” type=”4_4″][et_pb_divider _builder_version=”4.27.2″ _module_preset=”default” color=”#eeeef0″ hover_enabled=”0″ sticky_enabled=”0″][\/et_pb_divider][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.27.2″ _module_preset=”default”][et_pb_column _builder_version=”4.27.2″ _module_preset=”default” type=”4_4″][et_pb_text _builder_version=”4.27.2″ _module_preset=”default” hover_enabled=”0″ sticky_enabled=”0″]
Related Articles<\/h1>[\/et_pb_text][et_pb_blog _builder_version=”4.27.2″ _module_preset=”default” posts_number=”3″ include_categories=”current” fullwidth=”off” body_text_align=”justify” show_thumbnail=”off” show_author=”off” show_date=”off” show_categories=”off” border_width_all=”0px” hover_enabled=”0″ sticky_enabled=”0″][\/et_pb_blog][\/et_pb_column][\/et_pb_row][\/et_pb_section]","protected":false},"excerpt":{"rendered":"
Ask a business owner over the age of 50 when they plan to transition or exit their business, and you\u2019ll get one of two answers:
\n – a blank stare, or
\n – \u201cI\u2019ll work another 5-10 years and call it quits.\u201d(And if you ask this person again in another 5-10 years, you\u2019ll likely get the same answer!) <\/p>\nThe bottom line is the same \u2013 most business owners lack a plan for leaving their business. Read the article to learn what goes into an exit plan.<\/p>\n","protected":false},"author":9,"featured_media":703,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"\n
Ask a business owner over the age of 50 when they plan to transition or exit their business, and you\u2019ll get one of two answers: <\/p>\n\n\n\n
- \n
- a blank stare, or <\/li>\n\n\n\n
- \u201cI\u2019ll work another 5-10 years and call it quits.\u201d(If you ask this person again in another 5-10 years, you\u2019ll likely get the same answer!) <\/li>\n<\/ul>\n\n\n\n
The bottom line is the same \u2013 most business owners lack a plan for leaving their business<\/strong>. In this article, we'll describe what an effective exit plan looks like.<\/p>\n\n\n\n
The Purpose of the Exit Plan: Get from Point A to Point B <\/h2>\n\n\n\n
It\u2019s a mistake to assume that pure organic growth will get you or your business where they need to be when you exit the business.<\/strong> Sometimes, that just isn\u2019t possible. Relying on organic growth alone to grow your business might take 100 years, and you just don\u2019t have that kind of time.\u00a0\u00a0<\/p>\n\n\n\n
To avoid this mistake, you need an effective exit plan. This plan includes:<\/p>\n\n\n\n
- \n
- Data and metrics that define Point A<\/strong> \u2013 your current status<\/strong> (both personally and in the business)<\/li>\n\n\n\n
- Data and metrics that define Point B<\/strong> \u2013 where you need to be<\/strong> to exit <\/li>\n\n\n\n
- A measurable and achievable plan to get from point A to B <\/strong><\/li>\n<\/ol>\n\n\n\n
![\"infographic](\"https:\/\/ecngx364.inmotionhosting.com\/~capcon7\/wp-content\/uploads\/Effective-Exit-Plan-Infographic.png\")
<\/figure>\n\n\n\nIn our ongoing series on exit planning, we\u2019ve recommended business owners take stock of how they're using their time in business<\/span><\/a> and in their personal life<\/span><\/a>. This is part of defining point A \u2013 status today. We've also advised planning and starting activities desired for the next chapter in life. This is part of defining point B \u2013 future status. More factors remain in this equation. <\/p>\n\n\n\n
Point B \u2013 Where Do You Want To Be? <\/h3>\n\n\n\n
As Steven Covey says, plan with the end in mind. First, determine a point in time you want the option to exit \u2013 your point B. In addition to defining what you want your life to look like, you need the financial resources to fund it. For this, you\u2019ll need expert advisors to weigh in. These include Certified Exit Planning Advisors (CEPA(R)s) like our team at Capital Concepts USA, wealth managers, estate planners, attorneys, and tax accountants. <\/p>\n\n\n\n
Determining when you can exit depends on your business's state and your goals for the future. Whether you plan to maintain a second home, travel internationally, become a semi-professional golfer, or move into an in-law suite to help care for the grandkids will significantly alter your financial needs. Smart financial planners will help you: <\/p>\n\n\n\n
- \n
- Estimate your annual expenses.<\/li>\n\n\n\n
- Forecast the total amount you need based on your lifespan.<\/li>\n\n\n\n
- Establish a budget that you must fund.<\/li>\n\n\n\n
- Look at all of your financial assets, from the business to 401ks to stocks to real estate investments, and determine how to make them support you. <\/li>\n\n\n\n
- Identify how much you need out of your business and a reasonable time frame to reach that goal. <\/li>\n<\/ul>\n\n\n\n
Point A \u2013 Where Are You Today? <\/h3>\n\n\n\n
Next, you must accurately assess your current situation \u2013 point A. You can\u2019t create an effective exit plan without knowing the gap between where you are and where you want to be. Business owners frequently overestimate what their business is actually worth and underestimate how ready it is to sell. Getting real <\/em>information is critical if you want to exit successfully. <\/p>\n\n\n\n
As Certified Exit Planning Advisors, we assess where your business is today, asking questions including: <\/p>\n\n\n\n
- \n
- Is it possible to determine a value of the business, and if so, what is that value? <\/li>\n\n\n\n
- How ready is it to sell? <\/li>\n\n\n\n
- What are the strengths and opportunities? How do we quantify these? <\/li>\n\n\n\n
- What are the weaknesses and threats? How do we quantify these? <\/li>\n<\/ul>\n\n\n\n
The Effective Exit Plan<\/h2>\n\n\n\n
![\"Thumbnail](\"https:\/\/ecngx364.inmotionhosting.com\/~capcon7\/wp-content\/uploads\/know-your-gaps-thumbnail-231x300.png\")
<\/a><\/figure>\n\n\n\nThe answers to the questions above are essential to defining exactly what\u2019s needed to increase and maintain the value of your business at the level you need. As the Exit Planning Institute says, you must \"know your gaps\" (view\/print their PDF here or by clicking the image<\/a>) before you can fill them. Something is missing between Point A and Point B; an effective exit plan spells out how to fill those gaps and reach your successful exit.<\/p>\n\n\n\n
Lorne Greenfield, CEPA and founder of Capital Concepts, says, \"Exit Plans are highly customized because each business and situation is different. They include a readiness assessment to define deficiencies and what needs to be shored up to ensure the best possible value.\u201d<\/em> <\/p>\n\n\n\n
Contents of an Effective Exit Plan<\/h2>\n\n\n\n
Your exit plan will detail how to improve your profit margins dramatically, make your business function without you, and demonstrate consistent performance. Steps might include: <\/p>\n\n\n\n
- \n
- Documenting processes <\/li>\n\n\n\n
- Finding and fixing inefficiencies <\/li>\n\n\n\n
- Helping you find the right people for the work needed <\/li>\n\n\n\n
- Creating predictable sales and pricing models <\/li>\n\n\n\n
- Getting your books current <\/li>\n\n\n\n
- Finding capital to smooth out cash flow and invest in improvements <\/li>\n\n\n\n
- Holding teams accountable for reaching goals <\/li>\n<\/ul>\n\n\n\n
In our next several articles, we\u2019ll discuss how to determine the value of a business, improve that value, and get the highest value from your business when you exit.\u00a0\u00a0<\/p>\n\n\n\n
Have you read our previous articles in this series on Exit Planning?<\/em><\/p>\n\n\n\n
- \n
- Introduction to Exit Planning<\/a><\/li>\n\n\n\n
- What\u2019s In Your Way? Common Barriers to a Successful Exit<\/a><\/li>\n\n\n\n
- The Most Common Barrier to a Successful Exit: YOU<\/a><\/li>\n\n\n\n
- The Benefits of Planning for Life Outside of Work<\/a><\/li>\n<\/ul>\n","_et_gb_content_width":"960","footnotes":""},"categories":[14],"tags":[12],"class_list":["post-699","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-exit-planning","tag-exit-planning"],"yoast_head":"\n
The Formula for an Effective Exit Plan\u00a0 - 202602_CCUSA_Staging<\/title>\n<meta name=\"description\" content=\"An effective exit plan defines the gaps between where you are and where you want to be, spelling out how to fill them and exit successfully.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/capconceptsusa.com\/202602staging\/effective-exit-plan-formula\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Formula for an Effective Exit Plan\u00a0 - 202602_CCUSA_Staging\" \/>\n<meta property=\"og:description\" content=\"An effective exit plan defines the gaps between where you are and where you want to be, spelling out how to fill them and exit successfully.\" \/>\n<meta property=\"og:url\" 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- What\u2019s In Your Way? Common Barriers to a Successful Exit<\/a><\/li>\n\n\n\n
- Introduction to Exit Planning<\/a><\/li>\n\n\n\n
- Data and metrics that define Point B<\/strong> \u2013 where you need to be<\/strong> to exit <\/li>\n\n\n\n
- Data and metrics that define Point A<\/strong> \u2013 your current status<\/strong> (both personally and in the business)<\/li>\n\n\n\n
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- <\/ol>\n<\/ol>\n
<\/p>\n
<\/p>\n
<\/p>\n
<\/figure>\n<\/p>\n
<\/p>\n
In our ongoing series on exit planning, we\u2019ve recommended business owners take stock of how they’re using their time in business<\/span><\/a> and in their personal life<\/span><\/a>. This is part of defining point A \u2013 status today. We’ve also advised planning and starting activities desired for the next chapter in life. This is part of defining point B \u2013 future status. More factors remain in this equation.<\/p>\n
<\/p>\n
<\/p>\n
Point B \u2013 Where Do You Want To Be?<\/h3>\n
<\/p>\n
<\/p>\n
As Steven Covey says, plan with the end in mind.\u00a0First, determine a point in time you want the option to exit \u2013 your point B. In addition to defining what you want your life to look like, you need\u00a0the financial resources to fund it. For this, you\u2019ll need expert advisors to weigh in. These include Certified Exit Planning Advisors (CEPA(R)s) like our team at Capital Concepts USA, wealth managers, estate planners, attorneys, and tax accountants.<\/p>\n
<\/p>\n
<\/p>\n
Determining when you can exit depends on your business’s state and your goals for the future. Whether you plan to maintain a second home, travel internationally, become a semi-professional golfer, or move into an in-law suite to help care for the grandkids will significantly alter your financial needs. Smart financial planners will help you:<\/p>\n
- \n
- \n
- Data and metrics that define Point B<\/strong> \u2013 <\/span>where you need to be<\/strong> to exit<\/span><\/li>\n
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- Data and metrics that define Point A<\/strong> \u2013 your current status<\/strong> (both personally and in the business<\/li>\n