We have seen too many half-way attempts by other professionals at transition or exit Planning, often in a truncated format called “succession planning”.  These attempts have the same thing in common – they seek to apply the professional’s narrow specialty to a situation that demands multiple areas of knowledge. 

Exiting a closely held company successfully has never been quick or easy.  Given the many unforeseen events which can occur before you exit, we have found that a successful exit from your business needs to rest on a 12 building block design process (which involves eight key areas of professional advisor capabilities).

This is an experience-based, proven step-by-step process that has been leading business owners to their ultimate success — the profitable sale or transfer of their businesses.
   

This process is tailored to meet the particular exit objectives of a business owner.  This process helps to keep the train on the tracks and to successfully hand the controls to the next conductor.  The Transition Growth Planning process is a planning process designed for success rather than failure. 

Building Block 1 – Decide What I Want
The first action is to identify your personal, financial and exit objectives and then to make sure they fit together.  This begins with an understanding of the five prime transition questions that, once answered, enable you to move forward with clarity and purpose.

1. WHO - Whom do you want to transfer your business to?

2. WHAT - What part of the business do you want to transfer or keep?

3. WHERE - Where do you want to be as to the wealth you need or want after your exit?

4. WHEN - When do you want to exit from active duty and/or ownership?

5. WHY - Why do you want to exit?  This can impact who you want to benefit from your exit.

Other objectives impact your Transition Growth Planning choices.  These personal and financial objectives, which can impact you, your family and your business, are addressed in this process as well.

During this step you should begin to visualize your life post-exit, to focus on your other personal or life goals, whether this is to begin or buy a new business, to take on charitable endeavors, to begin a new career, or to just retire.  Many business owners find it difficult to just move directly from being active sixty to eighty hours per week immediately into complete retirement, so its important to start to address your post-exit plans.

Building Block 2 – Determine What I've Got
This step requires that you look at both your personal (nonbusiness) wealth and your business value.  It also entails a review as to where you stand on the other critical Building Blocks.

Building Block 3 – Protect My Family
Have you established your family's financial security if the unexpected happens to you?  Depending on your personal situation, you may have financial and personal goals and objectives that include ongoing financial support for your spouse and family, education funding for your children and grandchildren, charitable funding for your favorite charities, and helping to assure that your assets are tranferred to your family members upon your death as quickly and simply as possible.

Building Block 4 – Protect My Business
You can't transition from your business if you haven't protected it along the way.  This Building Block, is concerted with operating under the safest business entity structure, planning to avoid disputes, protecting intangible assets, and being prepared for an unexpected departure, death or disability to a key employee or owner.

Building Block 5 – Protect My Business Ownership
Have you created a business contingency plan if the unexpected happens to you or to another key owner?  Certainly, death, permanent incapacity, divorce (each as to either you or a co-owner) or a dispute among co-owners are probably not your intended exit routes.  However, these contingencies exist as possibilities in every business and therefore, need to be addressed as part of the Transition Growth Planning process.  Without proper contingency planning, your business can implode. 

Building Block 6 – Grow My Nonbusiness Family Wealth
This Building Block will address a comprehensive wealth program for you and your family.  It looks at the investment options available and helps you focus on the optimum investment strategies.

Building Block 7 – Grow My Business Value
For a moment, think of what you would do if you were rebuilding your company from scratch today from the ground up.  What would you include to attract buyers (or professional buy-out funds) to look at your company?  What features or characteristics would be necessary to make your business more valuable to you (while you own it) and more saleable and valuable to others (when you are ready to sell)?  What features would you include to help protect and build your tangible and intangible assets?
The Next Step System addresses the value drivers you will need to improve and protect in the Transition Growth Planning context to produce a better exit outcome.

Building Block 8 – Develop, Keep, and Transition Duties To My Management Team
This step includes an analysis of what is needed to help attract and retain key employees.  You should normally be grooming one or more key persons to be able to be your successor.  That type of person will usually be attracted to company ownership.  We want to look at one or more types of key employee equity ownership incentives which not only address this need, but which also keep all of your future exit alternatives available to you.

Building Block 9 – Prepare My Business For My Eventual Exit
Most of us would not attempt to sell our home unless we first took certain steps to “fix the place up” so it’s ready for sale.  Generally, however, it’s best to continually keep your “home” fixed up as if it is ready for sale.  Not only does this allow you to enjoy your home better, but it also helps to prevent small problems from becoming big problems, from preventing small maintenance jobs from becoming major mechanical breakdowns. 

Likewise, in business, it’s important to address certain pre-exit readiness initiatives ahead of the time of your actual exit.  This improves your chances of being prepared for an unexpected event or an unexpected opportunity, and also helps you to keep your business operational in a more profitable format. 

 
 

Building Block 10 – Act Now To Implement Tax Saving Strategies
Much of our United States tax system is based on how tax is imposed or not imposed on individuals and businesses, depending on the degree to which you have implemented tax savings strategies.  Advance planning and advance actions can impact your tax situation dramatically.  This Building Block will show you how.

Building Block 11 – Prepare For Transfer To My Inside Team
Do you know whether your business can be transferred to an inside buyer?  Do you know how to transfer your business in an affordable manner to family members, co-owners or key employees, while enjoying maximum financial security and paying the least possible taxes? 
There are several alternative design techniques to plan for a sale to an insider.  Each of these can help produce a better outcome. 

Building Block 12 – Plan For A Sale To An Outside Buyer
Do you know whether a third party buyer will be interested in your business?  Do you know how to find such a buyer?  Do you know how to sell your business to a third party, at optimal pricing while paying the least possible taxes?  To help attain a better outcome for your exit, this step involves specific pre-sale planning to address what to do and not to do to find a buyer and to know how to withdraw a certain amount of value before sale in a tax efficient manner.  

The Boy Scout motto is "Be Prepared".  It is good advice, and it is particularly applicable in business owner transition exit planning where studies show that 75% of former business owners were not satisfied with their exit due to a failure to understand their options and to plan ahead.  Just as you would not normally venture into a new market or a new product line without adequate preparation, you wouldn't want to venture into your foreseeable or unforeseeable exit without adequate preparation.

So.  Where do you stand?  How ready are you (and therefore your loved ones) for both the expected and the unexpected?  What follows is a fitness test which we've designed to help you to answer that question.  At the end of this test you should have a better idea of the answers to the above two fundamental questions:
-   What will be the probable, almost certain, future exit outcome of your present course, if left unchanged?
-   What's missing, the presence of which would make a substantial difference in producing a better exit outcome?

The Business Owner Pre-Exit Fitness Test
This Pre-Exit Fitness Test booklet is a component publication to our "The Next Step For Business Owners Transition Growth System."  "The Next Step For Business Owners" presents a comprehensive program that will help you, as a business owner, accomplish your mission to successfully transition from (and sell or pass on) your business on your timetable and you terms.  Go to www.NextStepForOwners.com to obtain a copy of this system.

    This Pre-Exit Fitness Test will help you and your Transition Growth Planning advisors design and develop your personal Transition Growth PLan for accomplishing your transition and exit successfully.

What Will Be Your Future Exit Outcome?
What do you hope will be the future outcome of the time and financial investment you've made in your business?  Based on over two decades of working with owners of small, medium-sized and large family businesses, we've found the answers to this question tend to be very similar.  Most owners of business operations have some or all of the following hopes or wishes:
-  That your income from the business will continue to grow and provide an increasing standard of living for you and your family.
-   That your business will help you accumulate sufficient financial resources for a comfortable  retirement.
-   That your business will not suffer or be lost through the negative influence of either internal or external adversities or claims.
-   That both your business and your family can financially survive your unexpected, premature disability or death.
-   That you can retire upon your own terms, while leaving your business in the good hands of successor management which you have selected and groomed.

The Next Step For Business Owners Transition Growth System
These 12 Critical Building Blocks form the cornerstone of The Next Step For Business Owners Transition Growth Plan.  These are accomplished through your use of The Next Step For Business Owners Transition Growth System.