Key Steps to an Effective Exit Plan

Step 1 – Plan Early

It is never too late to start planning your exit. The best day to start is today!

Step 2 – Assemble the Right Team

Your exit plan will have legal, financial, and other components that will require a team of professionals. Making sure you have the right team and that they all know the role they will play and the roles of the other team members is an important initial step in the process.

Step 3 – Put the Plan on Paper

A plan that resides only in your mind won’t do anyone any good if you are incapacitated in some way. Also, many important details of the plan will be lost or altered unintentionally if you rely on memory. Capturing your plan on paper is an essential step in the process. (Don’t worry…you can always re-print it if you need to make a change.)

Step 4 – Fund the Plan

There will almost certainly be portions of your plan that require some sort of financial preparation. A good example is obtaining life insurance policies as a funding mechanism for a buy-sell agreement. Make sure that you don’t just create a plan. You have to follow through if you want the plan to work.

Step 5 – Communicate the Plan

You can go through all the trouble of developing an outstanding succession plan, but if no one knows about it, it likely won’t work. Once your plan is complete, you need to communicate the plan to all the stakeholders. Your team of advisors should have a copy of the plan. Your employees need to know that you have a plan and how that plan affects them. Your immediate family or close friends that will likely be impacted by the plan need to understand their role in the plan, as well.


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