Doing the Math — Why Solving this 4x3 Equation is the Key to a Successful Business Exit

The math, it is not "mathing."

Last year, the Exit Planning Institute (EPI) produced the State of Owner Readiness Report, the first nationalist study successful 10 years to measurement proprietor readiness to exit their backstage businesses. It was an extended survey, pinch complete 1,200 business owners responding.

The bully news? 95% of business owners agreed pinch this statement: Having a modulation strategy is important for my early arsenic good arsenic the early of my business. That's particularly bully news erstwhile you see that 57% of Baby Boomers and 38% of Generation X owners expect to exit their companies successful the adjacent fewer years.

Still, not everything is computing, chap business owners.

Only 68% of america person sought extracurricular proposal regarding our transition plans. Worse yet, only 14% person established a general modulation advisory team, whose sole attraction is to hole an proprietor for an exit. That intends that while 19 successful 20 owners deliberation it's important to strategically hole for their business exit, only astir 3 successful 20 owners are surviving it.

And that conscionable doesn't adhd up.

Related: You Need an Advisory Team More Than Ever. Here's Why—and How to Run One Effectively

"But I person each these people!"

Good entrepreneurs and business owners are perpetually seeking extracurricular proposal — and help. So, it tin beryllium easy to deliberation that you, successful fact, person an external halfway exit advisory team.

Here's the litmus test:

• Is your squad collectively moving connected the modulation of the business? If the squad is siloed — moving only connected their area of expertise without knowing what the different members are doing — aliases valuing — past they aren't moving collectively aliases collaboratively.
• Do you person each the group you need? The halfway members of your squad must see an attorney, an accountant, a maturation advisor/coach and a financial planner. These group are facet "4" successful the 4x3 model, which I'll talk successful a moment.

Remember, exit and transition planning intends building worth for your business truthful that erstwhile it comes clip to exit, you tin do truthful connected your terms. Building worth is simply a measurement of living, not thing you do erstwhile an exit is imminent. So, moreover if you're not among the galore owners who scheme to exit successful the adjacent fewer years, your exit and modulation readying should commencement now.

Related: I Specialize successful Exit Planning—You Need to Make These 5 Moves Before Selling Your Business

Multiply your value: The 4x3 model

Once you person the halfway members of your outer modulation advisory team—an attorney, an accountant, a maturation advisor/coach and a financial planner—it's clip to get them moving to multiply your value.

These advisors request to activity arsenic a squad to thief you group goals and merge strategies to scope goals successful 3 areas: business, individual and financial. Think of these areas arsenic the Three Legs of the Stool, arsenic we telephone it astatine the EPI. Because you can't beryllium connected an uneven stool, adjacent effort needs to beryllium devoted to each area.

1. Business: Decentralizing the proprietor to make the business successful post-exit, while processing and assessing 4 intangible capitals: human, customer, structural and social.
2. Personal: Identifying the owner's adjacent shape of life and really a modulation helps them execute that stage. Today, younger owners scheme connected owning and exiting aggregate businesses passim their lives.
3. Financial: Too galore owners person their wealthiness trapped wrong their businesses. By building worth — not conscionable gross — you tin harvest that wealthiness to make judge you're financially successful post-exit.

Four advisors, each moving connected the aforesaid 3 legs of the stool. That's really you multiply your value.

Related: When Should Business Owners Start Developing an Exit Plan? Here's What You Need to Know.

The X factor: You can't multiply without it

While "x" tin mean multiplication, it besides refers to the X facet for your full halfway squad — that is, the quality, aliases concealed sauce, that makes the squad activity successfully toward your exit.

Getting a halfway advisory squad to activity together — not conscionable successful their functional area — is much difficult than it sounds. Each whitethorn person different ideas astir what is astir important erstwhile it comes to identifying your awesome strategies to deed your business, individual and financial goals.

Every proprietor has an accountant and an attorney. And, often, your individual financial planner is disengaged from your business. Too often, owners position a maturation advisor/coach arsenic purely functional—someone who comes successful each now and past to connection advice. But these are the halfway members of your team, and they each request to beryllium aligned and speak the aforesaid language.

One of these halfway members needs to person a task head role, and that personification should person a Certified Exit Planning Advisor (CEPA) credential. (Even amended if the full halfway squad is CEPA-certified!) By having a CEPA starring your outer advisory team, you guarantee that worth acceleration—and, therefore, a successful exit connected your position — remains the superior extremity of the team.

When you person each 4 advisors focused connected accelerating the worth successful the 3 cardinal areas (4x3), past you've solved for X — the X factor, that is, and the adaptable that's definite to person the astir important effect connected your exit.