Exit Goals

Mon, 06/01/2015 - 08:59


**We have updated this article to reflect the results of our most recent business owner survey.**

Give me a stock clerk with a goal and I'll give you a man who will make history. Give me a man without goals and I'll give you a stock clerk.  J.C. Penney

If any of us needed proof, a 2016 survey of business owners demonstrates that owners are not store clerks. The survey indicated that almost all owners have exit goals.

  • 79% want to exit within 10 years and nearly all owners surveyed had a preferred successor.
  • 17% have created a written Exit Plan.
  • 27% have calculated how much money they need to receive from the sale of their businesses in order to retire.
  • 18% have talked to an Exit Planning Advisor about creating a plan.

From the survey results, it is evident that owners clearly have goals, but only a handful have acted on them.

We believe that the reason for this nearly universal lack of action is that most owners have goals that are not "actionable:" The goals are too vague, insubstantial, and intangible. What owners need are goals that are precise, concrete, and real. This is how you can be invaluable. Few owners understand the need or have the ability to establish concrete, precise exit goals.

Before we examine the types of goals owners choose, let's examine why setting goals is the first step owners must take in creating an Exit Plan.

First, as in all plans, goals set the direction for the actions to be taken. Without goals there is no action. Without acting to grow value using a design that minimizes risk, maximizes value, and retains owner control before an owner exits a business, owners are unlikely to achieve the level of success they deserve for their lifetime of work and risk.

Second, only precise, clear goals lead to action.

Third, and related to precise and clear goals, is that experience working with thousands of Exit Planning clients demonstrates that if an owner's exit goals are not clearly delineated and in writing, nothing gets done. Research by Dr. Gail Matthews, a psychology professor at Dominican University in California, supports our experience. In a study on goal-setting involving 267 participants, Dr. Matthews found that people are 42% more likely to achieve their goals just by writing them down.

We've found several other advantages to establishing written goals.

  1. The very act of putting goals in writing forces owners to think about what they want to do and why.
  2. As goals are refined (even during Exit Plan implementation), goals become more precise and accurate.
  3. Owners who work with an advisor in structuring their goals consider more types of goals, collect more information when setting them, and think more deeply about their goals.

In the early stages of planning (the time when owners set goals), the advisor's main role is to ask the questions owners tend not to ask because they don't know to ask! The questions BEI has developed help owners discover and express both their objective goals (such as when they want to exit and how much income they need or want post-exit) and their aspirational goals (such as family harmony, legacy and benefiting employees). The advisor's role is not to suggest possible goals, but to ask questions that prompt owners to think carefully (with both heart and mind) about their desired future without their businesses and the future they desire for their businesses without them.

Imagine, for a moment, having in-depth conversation with an owner clients about their wishes for the future. What would result? How would your relationship change or evolve?