The Unplanned Business Exit

For some, planning a business exit can be a predictable, methodical process. We know that competition, we understand the demands of the market, knowing when to sell and might even want to know the actual date. But for many business owners, leaving the company is a harsh reality and often unplanned event.

Protecting your business assets against the dreaded six D’s sudden departure of a business may give new meaning to the term “disaster management”. While every business is experiencing unexpected difficulties, careful planning to ensure risk exposure is minimized can help keep the driver’s seat when it comes to managing your business. Familiarize yourself with the six D’s sudden departure of a business: debt, death, disability, divorce, departure and disaster. Know the enemy and look to address the six D’s in their operations and buy / sell agreements.

The Six D’s of an Unplanned Business Exit

Debt: Nobody goes into business plans and not succeeding in it, but not every month 40,000 companies in the United States. When the debt exceeds the income, is essential to leave on time in order to minimize losses. Limitations of the understanding and protection of critical assets are key to successful divestitures.

Death: Many companies are solely according to the abilities of its owner, relationships, passion and drive for success, and when there is a death of an owner or partner of a company can have a significant impact on a company almost immediately. While not want to examine their own demise, the strength and longevity of a company depends on being able to plan for such criticism, even if it means the loss or reduction reorganization. The survival of a company relative to key people must be assessed and accordingly planned exit strategies.

Disability: Unbelievably, death is not likely to end business as a disability. A disability to a business can put a significant drain on cash flow, working daily, and excessive downtime, all of which can be devastating. Insurance and financial planning to alleviate this impact must be evaluated carefully, especially when it comes to creating small businesses, where funding and resources are limited.

Divorce: Nobody wants to plan a business or personal divorce, while still pre-nuptial agreements may be gaining in popularity with many people never look to manage such an impact on their business. What happens when the partners can not get along? Or worse still, that inherit the other partner because of a divorce settlement? Leaving the company might be the only alternative being provided.

Output: It does not sound as bad as the death, but can cause the same results. A partner, key employees, or other resources to decide to go to competition, retire, burn out, or win the lottery. When they leave, how this impacts on the future of your business?

Disaster: If the above five D’s not enough to impact your business, there is no limit to the other disasters that may occur that were never envisaged in the robbery, disease, theft from employees , rotation of employees, devastating natural events, etc. In the post Katrina world 911 the impact of chaos theory is still enough to keep the best minds awake at night. Plan for the worst, to seek the best and know when to quit, if necessary.

For the typical business owner, each of the six D’s has special demands on family income, taxes, control of assets. An agreement, commonly called buy / sell agreements can be used for planning purposes associated with the feared six D’s. The success of a company is maintaining a separate entity from the personal and the risk can be reduced by the fair and equitable agreements among themselves before these events occurring.

Business is an evolution and a different travel route. While some may appear in an unexpected departure as a failure that others may see an opportunity for growth and freedom.