Keeping Your Exit Plan on Course in a Volatile World

Crossing out Plan A and writing Plan B on a blackboard.Here are a few more thoughts about staying focused in the midst of stressful life changes. We know that planning for the future — for example, staying focused on an Exit Plan — is a desirable yet sometimes daunting task. In our lives, change comes from all directions, whether we’re ready or not, and requires calculated adaptation to maintain our chances to thrive. As Warren Buffett is often quoted, “Investing is simple, but not easy.”

This holds true for managing your business as well as executing your Exit Plan.Yet in business Exit Planning, the largest obstacle to consistent optimal adaptation for your life is emotion. This is heightened during times of extreme business volatility and also shows up during times of transition in non-financial matters. (See my recent post on how stress affects the brain for more on this.)

Granted, when positive changes such as the birth of a child, marriage, or that new product introduction or new big contract, we diligently plan for them in stride and gladly adapt on the big day. But when rougher changes strike — death, divorce, recession, or the need to sell or merge the business or transition to the next generation — our emotions adversely affect our focus and thus prevent optimal planning.

Changes in the business world are complex and frequent, but conquerable. The most noticeable ones (and often those most apt to affect us emotionally) are recessions, loss of key employees or customers, introduction of new technology or the entrance of a direct competitor, and finally off-shoring. Knowing what we can control and accepting what we cannot control is a key to managing the unknown. By understanding the nature of volatility and that change is constant, it is possible to adjust to change and proactively contain risk by monitoring and modifying how you manage your business as well as your Exit Plan. 

It then becomes clearer that neither the most recent high point nor low point in your business is necessarily important in the long run and that your emotions exaggerate possible effects of recent results. This leads to a necessarily dynamic approach to Exit Planning. Every business Exit Plan needs periodic revision as the world, your life, business, and technology change.

I would like to thank Hugh C. Ogilvie CFA for his input. Hugh is an investment counselor with Rayner & Haynor. He can be reached at www.raynerhaynor.com.

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About Gary T. Brooks

Gary T. Brooks has over 27 years of experience in the investment banking industry and has been involved in over 100 transactions. He is currently the CEO of ExitPlanPros, where he helps business owners grow their business while planning their exit.

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