The following is a short list of reasons why most business owners refuse to plan their exit.
1. The owner fears the unknown. Fear of the unknown, or fear of change, is a key source of Exit Planning aversion. We often hear a client say, “I don’t know what the future will hold, so I will stay here in the present.” Additionally, many business owners are better short-term thinkers than long-range visionaries.
Solution: Know that an Exit Plan is a “living document.” It can be changed, and it probably will be modified over the years. If the marketplace changes, the plan can change.
2. Many business owners don’t know what they want. Many business owners are too busy to consider what they want in the future because they spend so much time trying to get what they want out of their businesses in the present. Sometimes we hear, “I’ve been doing what I’ve been doing for 30 years. I don’t know what I’d do if I didn’t have a place to go in the mornings.”
Solution: The notion of life after business can be terrifying to business owners (though though many won’t ever admit it). It's for this reason that Acme develops plans with lots of flexibility. For example, scenarios where the owner keeps a minority interest in the company, or keep the owner on as the Chair Emeritus, or design an arrangement to have the owner continue to be available for consultations. An exit does not have to occur in one fell swoop.
3. The owner’s identity is tied up in the company. After founding and running a successful business, many business owners feel as though their companies are extensions of themselves.
Solution: Many times, we show the owner how he or she can still be an ambassador for the company by doing speeches, attending trade shows, and promoting new products and services. There are many ways the owner can still be “related” to the company without all of the “headaches of ownership.” In essence, they can have all of the fun without the daily responsibilities.
4. Owners think they are the only ones who can run the show. Founding owners can begin to believe that they are the only ones who can keep the business up and running. On the surface, it makes sense: “Without me, the company will fold. I’m the only one who can make things work.” These are often the exact same owners who refuse to take vacations and tend towards micromanaging every situation.
Solution: This is a challenging scenario. We commonly encourage this Type-A personality to see the need to surround him or herself with quality people. Often, "mentoring the younger managers” until they develop a management style that keeps the business on an even keel is the ideal path forward.
5. The owner never wants to retire. For some owners, work is more than a means to wealth: It is their reason for waking up in the morning. We've heard some say, “I want to die at my desk. I have no other interests other than my company.”
Solution: This type of business owner usually wants to care for his or her employees and often thinks of them as family. This is the exact reason he or she should start planning... to think ahead and prepare for the time when he or she isn’t around to captain the ship (due to death, incapacitation, or otherwise). Acme can show a business owner how to validate that the team he or she has put together is set up for success.
These are just a few (albeit common) reasons business owners use to escape building their Exit Plans. If you have questions or need help overcoming hurdles to Exit Planning, simply reach out.
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