5 Ways Written Succession Plans Help Business Owners Succeed

Exit Planning in general and Exit Planning as BEI Members practice it share one characteristic: the creation and execution of a strategy that enables owners to exit their businesses. But the BEI Exit Planning Process has five distinct features that differentiate it from other forms of Exit Planning:

  • It’s owner-centric .
  • It’s led by a trained Exit Planning Advisor .
  • It’s written down.
  • It’s process-driven.
  • It’s the work of a team of advisors.

  • Today, we’ll look at why it’s so important for business owners and Exit Planning Advisors to write Exit Plans down.

    Why Must Exit Plans Be in Writing?

    There are five ways written Exit Plans increase the success business owners experience as they exit their businesses.

    1. Cost and Time Efficiency

    Exit Planning as BEI Members practice it necessarily involves several advisors and a business owner. It may also involve members of the owner’s family and management team, and advisors who perform specialized tasks (e.g., valuation analyst or family business consultant). Generally, the creation of the plan document takes several months, and its execution several years.

    A written Exit Plan keeps everyone on the same page throughout the entire process, because everyone can refer to the written plan. It serves as the repository of all information related to the owner’s resources, goals, and Asset Gap . The written plan also contains the actions advisors have recommended to reach the owner’s goals and a timeline to measure progress. The Exit Planning Advisor is responsible for creating and keeping the written plan document current, with the help of BEI’s EPIC software and other tools.

    For business owners, the very existence of a written plan makes the entire process more cost efficient, because no time or resources are wasted trying to figure out where everyone is in the process. For advisors, the written plan is a huge time saver because it centralizes all responsibilities, keeping all advisors abreast of where everyone’s at in the process.

    2. Written Plans Keep Owners in Control

    Written plans comfort owners who are leery of losing control over business decisions but anxious to minimize the time they’ll spend on planning. Owners know that when they communicate with their Exit Planning Advisor—the person who created the written plan—they are communicating with the one advisor ultimately responsible for their plans’ execution and success.

    3. Writing Things Down Increases Chances for Success

    According to a 267-participant study on goal setting, written goals are much likelier to be executed. Dr. Gail Matthews, a psychology professor at Dominican University in California, found that individuals are 42% more likely to achieve their goals just by writing them down .

    4. Written Goals Minimize Misunderstanding

    Written communication is more specific and clearer than verbal communication. While not immune to misinterpretation, it is far less prone to it. Clarity leads to consistency, which leads to better understanding among everyone involved in the Exit Plan.

    5. Written Plans Generate Accountability

    When a written plan includes deadlines—as all BEI Exit Plans do—it becomes more than a plan: It becomes an executable document. Written deadlines eliminate procrastination caused by owners who have “rolling five-year Exit Plans,” or by owners and management who work on exit-related tasks only after all other fires are extinguished .

    Related: The Golden Rule of Successful Succession Plans

    Writing Does Not Equal Chiseling

    A common misconception about writing Exit Plans down is that once they’re written down, they cannot change. This is not true.

    Typically, Exit Plans are revised to reflect changing circumstances and even changing goals. Because owners can have changes of heart, or mitigating circumstances can affect original plans, Exit Planning Advisors and their Advisor Teams need to be prepared. Having written guidance allows them to remain nimble when necessary. Without a planning document for all to refer to, it is simply impossible to consider how a revision impacts the rest of the plan, and difficult to communicate the change—and its effects—to all existing and future advisors.

    When our Members encounter advisors who claim to do Exit Planning, or owners who state that they have an Exit Plan, we encourage them to ask the advisor or owner to see a redacted copy of a written Exit Plan. Typically, those advisors and owners have nothing to produce because their Exit Plans exist only in their heads and hopes.

    It doesn’t have to be this way. With access to BEI’s Exit Planning training tools and network of advisors , advisors interested in earnestly pursuing Exit Planning can prove their legitimacy as an Exit Planning Advisor, and facilitate and create written Exit Plans, whether those Plans are comprehensive or dedicated to solving one owner issue (i.e., a Component Plan ).

    The alternative is less hopeful: Advisors can do nothing, and hope that none of their clients tell them that they’ve been thinking about exiting but don’t know where to begin . In our experience, those owners eventually seek out advisors who can help them begin or simply fail to exit on their terms. In our opinion, advisors hoping that business owners don’t seek them out to help them exit their businesses is a huge opportunity lost by inaction.