When Canadian tennis sensation Eugenie Bouchard reached the Wimbledon Women’s Singles Championship game this week, after being ranked just 133rd in the world in 2013, a reporter asked how surprised she was at her success.
“It’s not like a surprise to me — I expect good results like this,” she said. “I’ve put in a lot of hard work and it’s been kind of years in the making to me. So I believe in myself and I expect good results.”
Success in tennis was not a surprise to Bouchard, and success in exiting a business should not be a surprise to business owners or their advisors. With hard work and preparation, good results should be expected. The flip side, however, is that without hard work and preparation, success becomes dependent on luck and good timing – not what most owners want to wager their most valuable asset on.
The 2013 Exit Planning Institute’s State of Owner Readiness Survey revealed that while more than half of the business owners surveyed expected to transition their business in the next 5 years, 49% of business owners had no transition plan and only 13% had detailed action plans. More than 2/3 did not understand all of their exit options. The conclusion of the survey: “Business owners are not doing enough to successfully manage the last, great test of entrepreneurship: transitioning their business.”
In 2013, I asked Chris Snider, President of the Exit Planning Institute and founder of one of the most successful exit planning practices in North America, what return on investment a business owner should expect from a comprehensive exit planning process. He replied that in most cases, the return on investment exceeds 100% and occasionally exceeds 1000%. His rationale was as follows.
Assume a business owner can sell now for net proceeds of $1 million – a nice payday for many years of blood, sweat and tears. Instead, the owner invests $10,000 in a comprehensive business exit plan, and another $5,000 per quarter for 2 years working with a Certified Exit Planning Advisor (CEPA) implementing the strategies and actions identified in the plan. As a result of this hard work and preparation, the net proceeds increase 25% to $1.25 million. An investment of $50,000 over 2 1/2 years resulted in a $250,000 increase in net proceeds. Return on investment: 500%.
With the 2014 Wimbledon Women’s champion earning more than $3 million for 2 weeks of summertime tennis, Eugenie Bouchard might still be a little bit surprised at her success. But just as she has become a great inspiration for young tennis players across the country, her success should show business owners what a little hard work and preparation can mean to the results they achieve when they exit their business.