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Exit or legacy? Why every owner needs a plan

The best exits are often planned within the first few years of starting a business.

While that may sound counterintuitive, having an exit strategy in place can reduce stress, uncertainty and costly delays when the time comes to step away.

As a business matures, owners should consider not only how they want to leave but also what they want to leave behind.

For some, that means selling the business and moving to other ventures.

For others, it means creating a lasting legacy: a profitable, sustainable business that will continue to thrive well after their departure.

While some exits are carefully planned and executed over many years, others can be abrupt, triggered by retirement, health concerns, changing market conditions or unforeseen circumstances.

But legacy and exit planning are not mutually exclusive.

Both require business owners to think carefully about their goals and the future they want for the business and its people.

The difference between the two is often one of perspective and intention, which is why an exit strategy is so important.

While circumstances do not always allow for a plan to be followed exactly as intended, it is still better to be prepared, as these transitions can be disruptive for employees, customers and the long-term stability of the business.

One reason these conversations are often delayed is that business owners are naturally focused on growth.

Day-to-day operations, staff management and business development tend to take priority over long-term transition planning.

However, the earlier owners begin thinking about succession, legacy and exit strategies, the more control they have over the eventual outcome.

Leaving behind a business you have worked so hard to build can often come with an emotional toll that many owners do not expect.

After years of investment, sacrifice and decision-making, stepping away can be difficult, with some owners experiencing seller's remorse, despite achieving a successful outcome.

That is why transition planning should focus not only on the future of the business, but also on preparing the owner for life beyond it.

Legacy planning takes a broader view.

It focuses not only on the owner’s departure but on ensuring the business remains stable, staff stay engaged, disruption is minimised and the organisation is well positioned for future success.

By planning early, owners can create greater certainty, preserve value and increase the likelihood of achieving the outcome they ultimately want, whether that is a sale, succession or simply stepping back from day-to-day operations.

Ultimately, the more options available, the greater the likelihood of achieving an outcome that benefits everyone involved.

Getting good, solid advice around what the end might look like is the first step.

A simple question for every business owner is this: ‘If you stepped away tomorrow, could your business continue to thrive without you?’

If the answer is no, now may be the right time to start planning.

Jon Dudgeon is co-founder and chief executive of North Shields, Newcastle and London-based accountancy and business advisory firm Blu Sky

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