Why Setting Goals is Important, Even if They Change
While setting goals is one of the most important things you will do as you begin your business exit journey, it doesn’t mean that you have to know exactly where you’ll end up after you exit your business. Goals can (and often must) change to give you the best chance to exit your business on your terms. Business exits are rarely all-or-nothing propositions. Having the foresight to set actionable goals combined with the flexibility to change them when necessary gives you the freedom to pursue your vision of a successful business exit.
Let’s look at three reasons why setting goals is so important, even though your goals might change.
- Goal Setting Establishes Your Target
Setting goals allows you to establish a target that defines what a successful exit looks like for you, your family, and your business. By determining the why behind exiting your business, you can discover how you can get to that point, giving you a reason to pursue those goals and putting yourself on the path toward Exit Planning success.
- Setting Goals Provides a Road Map
Knowing the terrain standing between you and a successful business exit gives you the chance and confidence to properly prepare for the journey. Setting goals gives you actionable steps to begin working toward Exit Planning and having a systematic approach can decrease much of the initial anxiety about Exit Planning. Like an adventurist crossing the country on foot, you need to have a general idea for where you want to end up so that you can bring the appropriate tools and follow the best path to get there.
Setting goals also helps you track where you are on your journey toward Exit Planning success. Having an appreciation for where you are on the path toward your exit goals can encourage you to stay the course when times are good and refocus if things get bumpy.
- Goal Setting Addresses Conflicts Before They Do Damage
A common mistake owners make when setting goals is assuming their goals will mesh smoothly with their overall plans. However, goals can conflict with one another, and sometimes, those conflicts can derail even the best-intended Exit Plans. This is where the concept of flexibility plays an important role. For example, say you wanted to sell your company to a third party in five years for $5 million. Five years go by, and you find a buyer willing to pay you $5 million, but with some caveats: The buyer is shutting down local operations, will lay off all of your employees with no severance, and your brand name will be absorbed by the buyer’s conglomerate, never to be spoken of again.
While this example may seem extreme, many owners find that as they begin the process of exiting their businesses, some of their goals don’t jive with each other. Fortunately, our Exit Planning process accounts for situations like this by giving you a template for setting goals:
- Establish your foundational goal (exiting with financial security).
- Decide your baseline goals (exiting when you choose, exiting for the money you want, and transferring the business to whom you choose).
- Determine any number of value-based goals (e.g., keeping your legacy alive, keeping the business in your home town).
Setting goals early lets you find and address conflicting goals, dramatically improving the probability of both resolving them and exiting successfully. Knowing your goals allows you to see when they are in conflict and make an informed decision about which to keep and which to change.
hb&k has the experience and expertise to help you determine your initial goals and develop your exit plan. If you’re a business owner, please send us an email at firstname.lastname@example.org or give us a call at 251-928-2443. We’re available to assist you in planning the best future for you, your family, and your business.
The information contained in this article is general in nature and is not legal, tax or financial advice. For information regarding your particular situation, contact an attorney or a tax or financial advisor. The information in this newsletter is provided with the understanding that it does not render legal, accounting, tax or financial advice. In specific cases, clients should consult their legal, accounting, tax or financial advisor. This article is not intended to give advice or to represent our firm as being qualified to give advice in all areas of professional services. Exit Planning is a discipline that typically requires the collaboration of multiple professional advisors. To the extent that our firm does not have the expertise required on a particular matter, we will always work closely with you to help you gain access to the resources and professional advice that you need. This information is published by Business Enterprise Institute, Inc., and presented to you by our firm. We appreciate your interest.
Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.