Knowing Where the Exits Are
Anyone that has ever traveled on a plane is keenly aware of the emphasis airlines make on ensuring that its passengers are aware of safety measures prior to take-off. For example, flight attendants not only provide demonstrations on how to buckle a seatbelt but also how to use oxygen masks and life vests. They also focus on making sure the passengers know exactly where the exits of the plane are located. The flight crew does this on every flight regardless of the expected duration of the flight or whether or not passengers have previously flown on a plane. Why do they do this? They do this to better ensure the safety of passengers during a flight and for the unexpected eventuality of an emergency situation.
Similarly, a typical small business owner may take precautionary measures to create stability in the operations of his or her company. Likely, he or she will regularly review financial statements, implement and maintain internal controls, and remain vigilant about the economy (and the possible impact to his or her business). The aim of these steps and others is to help build steadiness in the company. Frequently missing, though, is an understanding by the owners on where his or her exits from owning the business are located. Absorbed in the operations of the company and creating consistency, many owners may lose sight of the need to also know their options for exiting the company for either an unexpected eventuality or a more expected occurrence like the desire to retire.
In particular, business owners need to be aware of realities like the fact that they will not be able to oversee the operations of their company forever, or that their children may not want to succeed them in managing the activity of the company. Business owners need to also be informed about the challenges they may encounter with selling their company including timing issues and economic conditions. Ultimately, whatever path a business owner decides to pursue to leave his or her business, the exit plan needs to be fully evaluated. Moreover, the decision to assess the different paths needs to considered as early as possible and regularly reviewed. Similar to flying and the emphasis given by the flight crew to safety equipment and exits, business owners need to regularly focus on both the steps necessary to create stability in their companies and how to exit the business when necessary.
Brian B. Lopera is a private banker with Amegy Bank NA, supporting Amegy Bank’s Private Wealth Services.