It occurs to me that the Pandemic and corresponding lockdown forced everyone into a reactive mode. Plans and activities had to be curtailed and everyone was forced to react to the new rules and restrictions that were put in place. As the world works its way out of the COVID-19 pandemic turmoil and into a new reality, it’s important that business owners shift their thinking from reactive (cut spending, furlough employees, postpone capital investment) to proactive planning. Why?
Because we are entering a new and changing world and the only way to succeed is to be proactive. This is one of those Kodak moments. No not the kind that Kodak used to advertise, but the kind where it is important to look to a new future and realize that our old film ways are going to be replaced.
Many business owners have seen their succession or exit plans derailed in recent months. Buyers may have backed out, and the value of the business may have fallen well below where they need it to be in order to extract the value required to live comfortably.
Events like this are overwhelming and can easily paralyze us, as we don’t know if we can get our plans back on track, or how. Add to that the pressure of running the day to day, week to week urgencies of the business, and the task of planning and becoming proactive can seem overwhelming.
The important thing is to start. Business owners must put a plan together to bridge the gap between their current situation, and where they need to be to either sell or pass along the business to another generation.
The aftermath of Covid 19 shouldn’t force you into living a retirement well below the lifestyle you worked hard for. It just may take a bit of time to get back on track.
Here are 3 things to assess and evaluate to ensure that you can be successful:
- What’s your new number?
- Do you know how much you need to be able to support your family’s lifestyle for the rest of your life?
- Do you know the real value of your business, what a buyer will actually pay?
- Do you know how much you will be able to take home if you sell your business? What you will net from the sale? Do you even know if you can sell your business?
You need to know the answer to these questions before you begin to put a plan together. These set a baseline.
- What’s your new timeline?
- How long before you want to transition out of the business?
- It’s likely that the value of your business has shrunk. Is there a gap between what the business is worth today and what you need?
- Is your original timeline still doable? If the answer is no, there are usually two choices, namely stay longer or adjust your lifestyle down. Which will you do?
- The Doing
- Once you have determined your number and decided on your timeline, you can begin to set a plan and start to act.
- Your plan need not be perfect; it is more to get you started. It is often said that a plan is only good until the first shot is fired.
- The real plan building begins after the first shot; it is iterative and will evolve as your circumstances change, but that original plan will do more than get you started; if done well it will guide you toward your goals. It is much easier to adapt with a good game plan than without one at all.
If you would like to learn more about planning and the process, we have developed to help business owners reach their goals, follow us and read our frequent blog posts on this subject.