Can a Business Exit Plan Make You Happy?
Owning and running a successful privately-held business is a constant challenge that is full of obstacles and opportunities. It is widely understood that writing down your business (and personal) goals can lead to an increase in the chances of achieving them. However, what is less often discussed is how you might feel when you apply a high level of discipline to planning the future. If, in fact, you value the freedom and financial benefits of owning a privately-held business, then it is also likely that you place a high emphasis on not only what the business can provide to you but how you feel about the business and its future. This newsletter is written with the purpose of answering an important question, i.e. “Can planning for your future by way of an exit plan make you a happier business owner?”
A Recent Study Tying Planning to ‘Happiness”
In a recent 2014 Planning and Progress Study performed by Harris Poll on behalf of Northwestern Mutual, 2092 American adults (18 years of age or older) were ranked in four (4) categories of ‘planners’:
- Highly Disciplined
When the survey turned to the topic of retirement, 91% of Highly Disciplined planners were ‘happy in retirement’ while only 63% of non-planners could make the same claim. It appears, therefore, that those who plan, tend to be happier when the time and occurrence (i.e. retirement) they planned for actually arrives.
All owners will one day exit their business, either voluntarily or involuntarily. Therefore, can the Harris Poll survey results (regarding retirees in general) be applied to business owners and exit planning?
“Happiness” for Business Owners
On any given day, some business owners may be happy to simply still be “in” business. However, in the aggregate, most owners balance a few factors in their overall determination of their own happiness.
First, many owners state that by owning and running their privately held business they enjoy additional flexibility and control (versus working for someone else) over their work lives.
Next, owners tend to grow their businesses around the disciplines where they hold (often times) a high degree of specific expertise. Therefore, being able to ply their trade in their specialized area can also make owners happy (a topic for another day: are owners as happy working on their business as they are working in their business?).
When an owner generates profits there is yet another level of happiness created by the market recognizing value in the products and/or services provided by the business.
Finally, successful owners who surround themselves with good people who help them achieve all of these goals also experience a level of satisfaction in leading their companies and forging new paths.
However, the question remains- does a written exit plan increase an owners happiness? Drawing on the findings from the Harris Poll study, it only seems natural that an owner will experience happiness if they know with more certainty:
- How they will one day exit their business and can exercise control over that exit.
- The marketplace will continue to get the benefit of the company’s goods or services after their exit.
- The profits generated from the continued health of the company will benefit their families and others who have helped the owner achieve success.
This newsletter suggests that having a plan to address these items, while also defining how and when the owner will experience their exit should, all things being equal, add to that owner’s overall happiness.
This newsletter is focused on the study of retirees and their relative happiness in order to compare it to an owner’s lack of planning around their future business transition or exit. We hope that it has helped you to think through the current plans that you have for a future transition of your business and make improvements to that planning with an end goal of relieving stresses surrounding your company’s future and ultimately making you happier.
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