Starting My Exit Planning Early

Article by:
Cynthia Umphrey, EO Detroit
Cynthia Umphrey
EO Detroit

Cynthia is the director and vice president of Kemp Klein Umphrey Endelman and May, P.C., a law firm that has counseled businesses, families and individuals for more than 37 years. Cynthia has been an EO member since 2005. She can be contacted at [email protected].

At some point, all owners leave their businesses. I have found that the best results are consistently achieved by those who work with an exit plan, especially since those plans also help us achieve our business goals of working on, and not in, our businesses. I am currently working on a plan to help me leave or scale back from my two businesses, even though I don’t plan to exit either for decades.

Here are the steps I plan on taking:

Step 1: First, I will seek the help of a CPA, lawyer and financial planner with whom I feel compatible and whose specialty is exit-planning. These professionals will help me establish what I want from my future, and they will tell me how to get there.

Step 2:
An advisory team will test my goals by matching them up to hard numbers. I have seen “excellent” exit plans fail because the owner sold his company for the purchase price he wanted, but the net proceeds weren’t enough to maintain the lifestyle he had in mind. A hard-numbers test would have caught this flaw.

Step 3: Once my goals are set and tested, it is time to write out a plan. Certain parts of it will involve legally binding documents that must be signed immediately. Not having these documents in place can and will destroy my entire plan. My exit plan should also be flexible for business, life or goal changes.

Step 4: I’ve learned that it’s important to have meetings annually (at a minimum) to ensure that the exit plan is on track. As a business owner, I work on my company to identify changes, remove roadblocks to success, identify opportunities, etc. The same applies to my exit plan.

Step 5: Many owners leave their businesses unexpectedly because of illness or death. With this in mind, an estate plan should coordinate with the exit plan. I will ensure I have one created before I officially exit my businesses.

I am happy to say that exit planning helps me maintain discipline in running my businesses, and it will help me leave in my own time and on my own terms. Furthermore, it will protect my family if the worst-case scenario should occur. As an entrepreneur, that’s the kind of freedom and flexibility I need.

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