Benchmark Business Group

Option Planning Is > Exit Planning

March 26, 2024

As a business owner you’ve probably thought about your exit plan, even if it’s years in the future. Today we want you to consider “Option Planning.”

You’ve worked hard building and growing your business and you deserve to know your options when you’re ready to exit that business. 

When we talk to business owners about exiting their business many plan to either:

  • Sell their business – but are not sure what it’s worth, or
  • Transfer their business to their children/employees

Many business owners have an age range in mind when they want to retire. The problem is sometimes life happens. As a company that offers both business coaching and business brokerage services, we’ve seen a wide range of what can happen to small business owners, including:

  • A health issue, their own or a spouse, forces them to leave the business sooner than planned.
  • Children decide they want to explore another life path.
  • The business isn’t as valuable as the business owner thought and they won’t receive enough to retire.
  • The business just isn't sellable so they end up closing the doors and selling off the assets.

Experiencing these situations with our clients has made us passionate that every business owner should not only know their options, but have a plan in place to work toward increasing the options they have to exit their business.

If you’re interested in Option Planning, you should contact us for an in-depth conversation of what that would look like for your situation. The steps will change based on factors such as your timeline to exit, but will include:

  • Getting a Calculated Value for your business. This is a baseline that can easily be updated yearly so that you’re always aware of the current value of your business. You might have heard that valuations are expensive, and if you want a certified valuation the price will increase, however most business owners don’t know that yearly valuations can be quite affordable.
    
  • Understanding what drives the value of your business and how you can increase it. Our business coaches and business brokers can help you understand the drivers that influence the market price for your business. Once you know the drivers it’s easier to understand what you can do to increase the value of your business.
     
  • Understanding the gap between where you are now and where you want to be when you exit. We use a Freedom Calculator that helps you look at what you need to retire. It considers all of your assets and debts including the price of your business. This will give you a solid plan for ensuring that when you’re ready to exit you know that you’ll be financially secure.

These three steps will set you up to have more options. You can still plan to leave your business to family or to have your employees buy it, but instead of just hoping that will work out, you’ll have an actionable plan in place. And if that plan changes you won’t be caught off guard and you’ll have the knowledge to make the needed adjustments to exit your business.

We’re challenging all business owners to stop and consider your exit. Do you know your options? Do you know what you can control when it comes to increasing the value of your business? If not, we should talk today, because you never know what tomorrow will bring.

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