There’s only three places to plan your exit strategy, and they’re all tables: Kitchen table, Boardroom table or operating room table. If not, someone else will put together a plan at the embalming table.
A typical scenario: you own a closely-held corporation or sole proprietorship. The operation has value beyond you, the owner. A family of products, unique Intellectual Property or a scalable service. You’d like to retire someday or leave something to your heirs after your passing.
You can gather your family around the kitchen table for a planning session. Discuss a time horizon. Discuss whether another family member will take over, or whether you’ll sell the operation to employee or a third party.
If your family is not active in the business and they won’t actively participate is exit strategy planning, you’ll likely have a discussion around your boardroom table. Topics include a time horizon, and whether an insider or a third party sale.
While advance planning makes the most sense, most owners of closely-held business just don’t do it until something tragic happens. And it’s usually a health scare. Then they dictate a quick plan on their way to the operating table.
If that tragedy claims the owner’s life, the heirs (metaphorically) gather around the embalming table and decide what to do with the organization. It’s at that very time that the heirs are least capable of formulating a viable succession plan, and need one the most. This lack of planning is one major reason why most businesses never survive beyond the first generation.
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