Good news might be when your MD says you’re as strong as a horse and you’ll live at least another 20 years! The bad news is now you can’t avoid completing the Transition Plan for your business, rather than just slipping out the back door!
Planning of any kind is a struggle for many. Some say, “It’s hopeless – everything’s always changing.” Others say, with crossed fingers, “It’s all mapped out in my head – what could go wrong?”
While we all know some change is good, at times some of it doesn’t feel so great. The inevitable truth is – it is never ending. A business transition will happen someday, and in one of two ways: a smooth and well-planned ‘non-event’ or a messy and expensive surprise.
Da Plan, Da Plan (with apologies to Fantasy Island) ~
Exit Planning must, of course, deal with many matters. Here are the Risk Manager’s four initial steps. The next RiskSmart Tip will outline a more detailed Checklist, but let’s ease into it and start with these.
- Prepare. Lighten up to get ready for a positive planning exercise. Make it easy by thinking about taking a nice, long vacation (rather than getting hit by the bus). Think one month at first, then extend to three. Schedule a morning a week to get started.
- Document. Create or update an Operations Manual containing all your processes and procedures. Include actual tasks that are performed regularly, and guidelines for sales processes or customer complaint resolution.
- Consolidate. Get everything in one place and assign where each piece will reside in the future.
- Line up your key advisors – legal, accounting, estate, etc., plus some employees – and make sure they are specialists in what they do.
- Create lists of assets, locations and values.
- List liabilities and accumulate the relevant documents, contracts, leases, etc.
- Gather insurance information and other financial protections or backstops (LOCs, etc.).
- Manage Risks. With your advisors identify and understand the key risks that could impact your business during your “extended vacation.” Get input about practical protections and create some simple plans that others can follow to both prevent and to recover quickly when something goes wrong.
These efforts and time investments can be the difference between getting wiped out and surviving to see your exit strategy actually succeed.
Please feel free to share your experiences and tips in the comments area below!