“Exit Planning? I’m too busy. I just don’t have enough time.”
As advisors we’ve all heard this refrain, and we know that active business owners seldom have “enough time.” The only speed bumps high enough to slow their pace are death and terminal burnout.
Owners are not ill intentioned, instead they are so well intentioned that they take on additional business-related tasks the moment they complete one. With this pattern in place, owners will never have time to plan for their futures.
What they need is not more time, but an awareness that they must change their role in their businesses if they are ever to exit successfully. If they remain “all things to all people,” and if they insist on reviewing and directing every decision, they will not develop management teams that can operate without them—an essential requirement of increasing transferable value.
Indeed, in the words of Peter Drucker, “As a new venture develops and grows, the roles and relationships of the original entrepreneurs inexorably change. If the founders refuse to accept this, they will stunt the business and may even destroy it. But even among the founders who can accept that they themselves need to do something, few know how to tackle changing their own roles and relationships.1″
In claiming that they are too busy to engage in Exit Planning, owners don’t realize that:
- They are failing to plan for the future of their businesses and personal lives, and
- What we’re ultimately asking them to do is change what they are doing in their businesses.
Owners who become “fewer things to fewer people,” have more time to think, plan and act for their future benefit, and the time they do spend in their companies is more beneficial to their companies and gratifying personally. Without that change owners will always be too busy.
The consequences to owners who are their business are drastic: one day they discover that their businesses have little value without them. As a result, these businesses can’t be sold or transferred and business growth is limited to the capacity and endurance of the owner. In mathematical terms: If Owner = Business, Business ≅ $0.
As Exit Planners, we must demonstrate to too-busy-to-plan owners that:
- They must “accept that they themselves need to do something.”
- They need to work with experienced advisors who “know how to tackle changing the owner’s roles and relationships.”
How do you accomplish the first task?
- Discuss the fact that entrepreneurial companies reach a point—an inflection point—where they will either stagnate or grow rapidly. That inflection point is the owner’s decision to change their relationship to the business in order to free up its growth potential or to continue on the treadmill. The fact that the owner is “too busy” to plan is a strong indicator that he is doing too much and stifling the growth of the enterprise.
- Provide examples of what changing an owner’s role means, how it is done, and what the likely consequences are. Hint: almost every mature, yet growing company, you represent has owners who have changed roles substantially as the business grew.
- Provide information on what companies and owners do to create transferable value—that is, a company whose value and cash flow is not disrupted if the owner leaves—via sale or death.
In short, when owners proclaim they are too busy to plan, be in a position to respond, “That’s great! Do you want to remain too busy until you are carried out? If not, I can help. Let me show you how.”
1. Drucker, Peter F., The Essential Drucker, HarperCollins, 2001, page 156
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