Succession and exit planning: How to prepare for the day you hang up your boots

Succession and exit planning: How to prepare for the day you hang up your boots

Exit plan advisors Chris Cimaglio and Todd Downing shared advice on how growers can build value in their business so it's ready for the day they finally leave.

July 21, 2022

The Cultivate’22 educational sessions continued with the presentation “Green industry succession and exit planning: Building value into your business” by Chris Cimaglio and Todd Downing from BEST Human Capital & Advisory Group. The session covered how growers can prepare for retirement by leaving their business in the best possible position before selling the business. Recognizing that the exiting and succession process can be complicated and emotional, Cimaglio and Downing want to help growers and business owners have a clear plan they can follow.

The presentation began with Downing sharing some staggering statistics. Especially startling was the report that 83% of business owners don’t have a succession plan. Other stats include that 80% of a business owner’s net worth is in their business and that after one year, 75% of business owners regret selling their business. With so much money wrapped up in their business and such a high likelihood of future regret, it’s important for business owners to have a plan in place for the day they retire and pass on or sell their business to someone else.

Since delaying exit planning can hurt a business in the long run, Cimaglio and Downing recommended business owners start planning at least three to five years ahead. This planning process includes business owners asking themselves questions such as:

  • Am I the most important contributor to my business? Can it run without me?
  • Does my business define me?
  • What is my business worth?

Cimaglio and Downing explained that owner centrality can really kill a business’ value. If a business can’t run without its owner, then that makes it much less tempting to buy. A huge part of a business owner’s succession planning is making sure they have a team in place who can run the operation after they leave.

It’s also important for a business owner to be ready for what’s next on a personal level, they explained. Many owners are defined by their business and aren’t ready to give up such a huge part of their lives, which can contribute to those feelings of regret after they sell the business.

For many owners, their life after retirement depends almost entirely on how much money they get for their business, so they need to do whatever they can to increase their business’ value. This process includes eliminating owner centrality, building a talented team who will run the business after it’s sold, developing loyal customers who will keep coming back, keeping technology and infrastructure up to date, creating social capital through brand reputation and community engagement, and, of course, continuing to increase sales and revenue.

As Cimaglio and Downing said, 100% of people will leave their business someday. There’s no avoiding it, so it’s important for business owners to do what they can to prepare for the day that they have to sell their business.