The Two Pillars of Smart Business Planning (Owner Planning + Exit Planning)

Insights

Successful business owners have much in common with magicians. Armed with little more than a vision, they conjure a thriving and resilient operation from nothing, willing it into existence one moment at a time—until they hand off the reins and set out to do it again. 

It may appear miraculous, but this cycle owes nothing to sorcery. In fact, it’s a function of meticulous planning, both for near-term business objectives and the ultimate exit. 

For those at the start of their entrepreneurial ventures—or in the thick of the quest—charting the future should always take priority. The rewards of shrewd planning? The satisfaction of seeing your creation take flight and a handsome windfall to fund retirement—or your next endeavor.

Owner Planning

Accounting. Sales. Product Design. As the owner, the buck stops with you. Even with a solid team in place, they’ll look to you to light the way. 

This renders foresight and strategy critical facets of business ownership. Founders can’t delegate vision. 

So, what goes into superior owner planning? An array of interrelated skills:

• Cash Flow Management – Fundamentally, business success relies on having more cash rolling in than rushing out. Careful stewards keep future outlays proportional to spending and sales projections.
• Targeted Strategy – Owners must resist the “one-stop-shop” mindset, which leads to burnout and subpar service. For richer returns, focus on delivering superior results to a specific slice of the market. 
• Milestone Marking – Setting goals and measuring performance—it’s how any endeavor moves forward. Owners must manage expectations while ensuring accountability for success or failure, whether that be their own or team members’.
• Wise Hiring & Retention – Successful leaders possess a sharp intuition when it comes to assembling and nurturing a team. But hiring is just the start—retaining top talent requires fostering growth, recognition, and alignment with the company’s vision.

By cultivating these traits, strong leaders deliver that rare and precious result: growth. As advancement accelerates, it tends to compound, producing a firm that transcends the sum of its parts, and the tally of individual decisions. 

Exit Planning

Eventually, the time comes when a founder needs to let go of their creation. This means more than simply “selling the business,” however. 

Exit planning entails a three-pronged approach geared toward an ideal conclusion, rather than a simple handoff. When plotting their third act, business owners should consider:

1. The “Now” – What must happen in the current moment to ensure optimal exit conditions? Owners should ask whether their company’s current state promises a healthy return and what immediate risks it faces.
2. The Payoff – Ultimately, exits correspond to a specific financial figure, one that will likely impact your wealth objectives more than anything before or after. Owners must determine a clear, realistic figure and ensure that it serves their overarching financial goals.
3. The “Day After” – After spending years (or decades) building a thriving operation, you’ll have some attachment to its future, even absent a direct role. When negotiating an exit, ensure the buyers’ vision aligns with your values and serves your employees’ future.

Owners should also get serious with themselves and ask, “Am I really ready to call it quits?” Since the decision will dramatically alter their day-to-day life, it’s critical to prepare mentally and emotionally for relinquished control.

After a thorough assessment and deciding to pursue a conclusion, the true planning begins. Owners should aim to maximize their business value by:

• Ensuring pristine financials – The cleaner and clearer your accounting, the more inviting a business becomes for potential buyers. Take time to painstakingly review accounting records, debt, employee benefits, and any other obligations.
• Reducing risk – Buyers want as close to a “sure thing” as possible. If they sense that a venture comes freighted with risk, they may hesitate or offer less-than-desirable sums. Address looming issues and shore up your operation against unforeseen events.
• Protecting value – Owners should initiate “hard conversations” about retirement funds, asset stewardship, and any impending budget shortfalls. Poorly executed transitions can shave immense value from a previously thriving company. 
• Planning for taxes – No topic makes for a less enjoyable conversation than taxes, but ignoring them could easily derail your exit. Tax planning may loom as a labyrinthine process, but the payoff can be enormous.
• Enlisting an exit expert – Every exit presents unique challenges, but the fundamentals remain the same. Most business owners only deal with the exit process once. A seasoned consultant helps avoid pitfalls and seize opportunities.

Set Sail Today, With Tomoro

Business magic often comes down to wise planning. At Tomoro, we understand that charting a course toward a lucrative and rewarding exit poses a daunting challenge, even for grizzled veterans of the entrepreneurial world. 

Our peerless team of advisors, strategists, and exit specialists stand ready to co-pilot your business from inception to rewarding exit. We also offer a full spectrum of wealth management capabilities to accelerate your prosperity and provide bespoke financial solutions.

Discover how to implement a successful exit and unlock your personal WealthMap. Reach out today.