One of the most important responsibilities for every CEO and business owner is planning for their eventual exit. Ensuring continuity in leadership is key to preventing disruptions when it’s time to pass the torch.
However, smooth transitions can be hindered if leaders and their teams fall victim to common exit planning mistakes.
The most significant mistake is often neglecting to prioritise exit and succession planning. With daily operational demands and challenges, it’s easy for leaders to lose sight of the future. But without a forward-thinking approach, they may face avoidable hurdles down the road.
“I encourage you to start considering your exit strategy, even if retirement is still years away,” advises TAB Facilitator Phil Spensieri. “Thinking ahead can make a big difference in the transition process.”
Common Exit-Planning Mistakes to Avoid
1. Failure to Involve Stakeholders
A CEO’s departure impacts the entire organisation. Not keeping stakeholders informed about your exit plans, when appropriate, increases the likelihood of a rocky transition. Involving stakeholders early allows them to offer valuable insights that can shape a successful succession process.
2. Neglecting Your Management Team
To ensure a strong future for the business, it’s crucial to cultivate a capable management team. Begin delegating decision-making responsibilities to managers or department heads. If you’re involved in selecting a successor, make sure they are the right fit in terms of skills, experience, and temperament.
As Chad Lusco from the Forbes Business Council notes, “It’s often a good idea to turn to an advisory board or consultant for neutral guidance.” Being a TAB member means you can also benefit from the collective wisdom of your peers.
3. Inaccurate Valuation of the Business
When selling the business, avoid the trap of either overvaluing or undervaluing it. Potential buyers will likely assess the business’s worth independently, and discrepancies in your valuation may deter them, unnecessarily prolonging the sale process.
While you may think you know the right (or best) price for selling the business, remember that “buyers often take into account numerous other factors [such as] how long the business has been profitable, the strength of the management team, and relationships with key customers. Stay informed about market trends and be flexible, using a neutral third-party valuation expert to arrive at an accurate value when the time comes to sell.
4. Failing to Accept When It’s Time to Leave
Holding off on your departure—or worse, refusing to leave—can be a costly mistake. Savvy CEOs set a departure date and focus on what they want to achieve before then.
With a clear exit timeline, you can concentrate on long-term strategies, looking for ways to boost profitability and increase the value of your business. As Business.com advises, “Building more value in your business makes it more attractive to potential buyers.”
Plan Ahead and Avoid Costly Mistakes
Avoiding these exit-planning missteps can save valuable time, money, and resources. Instead, these efforts can be invested in ensuring a smooth transition and preparing for the next chapter of your life.