Livia Jenvey | Oct 19, 2020
One of the areas my firm is getting more questions on from business owners is exit planning.
I've spoken with many business owners who have already initiated mitigation strategies and actions to minimize the COVID-19 impact on their bottom-line earnings. However, with still much uncertainty of the economy's future due to the long-term implications of COVID-19 and having had already have dealt with the last recession a decade ago. Some owners wonder if sooner than later is a better time to exit their business to gain the best financial return.
When you've put a good deal of work into your business for many years, it's expected to get a sizeable financial return when you exit it. However, when a comprehensive exit strategy is not in place, many business owners do not receive the expected financial returns when exiting their business.
The Exit Plan Instituted conducted a Readiness Survey and found that only 20% of business owners gain a significant financial return when they exit. That equates to 80% of business owners' not making out financially as expected when they exit.
Why is this number so high, you wonder?
Over the years, I've observed when working with private companies. It comes down to how the owner's score the 4Cs (four capitals):
- Human Capital
- Customer Capital
- Structural Capital
- Social Capital
Business owners manage the 4Cs each day to care about their people, culture, customer experience, and run their business. Yet, it's done based on manage things running and putting out fires. Most business owners don't intentionally put in operational methods to frame, review, measure, and analyze how their business could operate differently. If things are working and you're making good money, why do you need to shift these things around, you think.
Business owners who are actively working on and improving their 4Cs not only gain higher earnings year-after-year and exit on their terms with higher financial returns.
These are the owners who make higher earnings when they exit versus those who don't.
Because when you are actively working on & improving your organization's 4Cs. You've already had contingency plans in place to pivot through any after-effects of COVID-19 to continue to increase your business earnings for gaining a significant financial return the day you decide to exit.
Have you assessed if your business is operating at its highest for the 4Cs?
Starting here will allow you to begin a plan that will provide you the financial returns you are looking for not only when you exit later but also today.
If you're a business owner seeking guidance on where to start learning more about exit planning, send us a message. We're happy to provide advice on how to begin improving your 4Cs to increase earnings today.
To learn more about how Jenvey Consulting's Certified Exit Planning Advisor (CEPA) can help you exit your business and accomplish your goals, schedule a strategy call with one of our team members today.
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