In business terms, the transition out of the business for an owner is referred to as an “exit,” while the plan for a defined ending is called an “exit strategy.” Having a business exit strategy conveys that you’re in control of your business; that you’re aware and goal focused, and that you have a plan for an organized and profitable ending. Remember, it's inevitable - all businesses must transition at some point; all owners must exit the market.
Owners of wealth management firms who don’t plan for transition are often unable to receive enough profit from the business to fund a comfortable retirement. This occurs not because owners fail to create value in their firm; instead, it’s because they fail to do the planning that would have allowed them to retain that value.
Given that the average advisor age is 57 years old, many advisors have been in business for multiple decades. Despite this experience, statistics show that the vast majority of advisors have not developed an exit strategy. If this describes you, don’t despair – but do start your exit strategy planning today, keeping in mind that defining it is a process that requires careful thought. It is a continuous exercise that takes time, both now and in the future. Your exit strategy will need regular review as your business grows and changes.
To get you started, all strategic exit plans should address the following key areas:
By systematically working through this checklist you’ll be able to identify the best way to create a smooth transition and make the business more valuable and desirable in the process. This type of planning cannot be left to chance – your company will lose a significant portion of its value without the proper preparation. But with your strategy in hand, you’ll be better able to work each day to make the decisions and moves that will position your business to reach your exit goal.
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