Building Your Business Exit Timeline

Aug 3, 2016 | By: Michael Blanchard

Time is Money

If forced by circumstances beyond your control, you could likely exit your business within a year.  Some business owners are here today and – literally – gone tomorrow, but usually not by their own choice. But leaving in style – with adequate cash and having achieved whatever other goals you have set— that takes time, far more than most owners expect.

So, you can leave whenever you choose if you are willing to settle for a less-than-ideal payday, or you can leave in style.  The questions is: “Do you want to control your own exit or will it just be something that ‘happens’ to you?”  Most owner prefer to control their own destiny, but have no idea when to get started.  Let’s look at some tasks common to all exits, and how long they take to complete.

Design and Create Your Exit Plan

Timeframe: 90 days to one year

While it is possible to create an exit plan in as few as 90 days, most plans require almost a year to create. Most owners need time to ponder and weigh alternative paths, and to think through the many issues that arise when they move through a comprehensive exit planning process for the first time.

Tax Planning and Implementation

Timeframe: 3 to 10 years

Part of reaping full value for your company involves minimizing taxes.  Keep in mind that one of the headwinds you may face is increased tax on income and capital gains.  Fortunately, planning can not only minimize taxation upon the transfer of ownership interest, it can save taxes on an ongoing, annual basis.     

The Ownership Transfer Transaction

Timeframe: 1 to 10 years

It is possible to transfer your entire ownership by simply transferring all of your ownership in exchange for a promissory note right now in one grand transaction, with a big celebration that follows.  This is a form of financial suicide.  What will you do if the note payments stop coming and you’ve been absent from the business for a couple of years already?  A methodical, possibly incremental, approach to preparing the business, preparing yourself and preparing the next owner (especially if he/she is a child or employee) for a successful future tends to create a better outcome for all involved.  Take the preparation and execution of the ownership transfer in whatever size bites you can manage, whether that is attaching one area per month or per year – you know your business well enough to know how quickly the recommended action items in your Exit Plan can be completed.

So think about your exit as a process, not an event.  Everything you’ve done in your life that was significant took time and multiple steps or stages.  Your Exit Plan is no different.  Your Exit Planning timeline is your bridge to the future that you envision for yourself, your business and your family.

Take control of your future and create your timeline today. Give us a call to assess your readiness to leave your business. Call: 503.390.7880

The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need.
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