Building Your Business With the End in Mind

Succession and exit planning graphic featuring an old farmer or grower looking over their greenhouse crops

Succession and exit planning for retirement

“I need to find a new job!” I was stunned, “Why Dan? You love your job.” His response was even more surprising, “Because our 85-year-old owner just came in and said to the whole team that he has no plan to leave and just to accept that he is going to die at his desk someday.” Dan, along with the best and brightest at this once growing and successful company, saw a bleak future and started heading for the exits, leading to a decline in business. Eventually, the owner passed away (thankfully not at his desk), and his uninvolved family liquidated the company for a fraction of its original value.

Stephen Covey coined the phrase, “Begin with the end in mind.” The 85-year-old owner refused to do it and couldn’t accept that exiting your business is inevitable. The real question is whether it will be by choice and on your terms or by chance and circumstance.

Most business leaders meet with their teams every year to budget and strategize their 1, 3, and 5+ year business plans— a smart move in any competitive environment. Yet, how many invest the same effort into crafting a robust transition strategy? Statistics suggest that very few do. The Exit Planning Institute (EPI) reported in its 2023 National State of Owner Readiness Report that only 41% of owners responding to the survey had a formal, written plan.

Developing a transition plan is not just prudent; it’s essential. It’s about positioning yourself and your business to seize opportunities and extract maximum value when the time comes to move on to your next adventure.

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The Owner’s Trap

Why do so few business owners prioritize a transition plan? In the horticulture industry, owners are often consumed by the daily grind—managing sales, purchasing, planting, labor, harvest, delivery, payroll, taxes, and more. Detaching from an owner-centric model, in which the owner is trapped in their business, is crucial to making a business transferable and sustainable. The key is prioritizing the effort to build a reliable team to share the workload, allowing the owner to focus on strategic growth rather than micromanaging daily operations. However, most owners lack the time to recruit and train new team members. And all too often, there are no written operating procedures to guide new hires around well-established processes. Without the right people on the bus, along with written or video-based guides for all operations, it is difficult, if not impossible, for owners to step away from the business.

Many, like the 85-year-old owner, delay exit planning believing they have ample time. Yet unexpected events like death, disaster, divorce, disability, disagreement, which happens to 50% of all business owners according to the EPI, or an unexpected great offer from a potential buyer can force an immediate transition. Incorporating an exit strategy into your business plan early ensures readiness for such circumstances. At the very least, owners need a current business valuation to understand what the business is worth so you can optimize its value if the unexpected comes knocking.

Furthermore, many entrepreneurs start businesses driven by their passion for a craft but overlook the demands of business ownership. This can turn their venture into an expensive, burdensome hobby. Starting with an exit plan instills an enterprise mindset, guiding decisions toward building value and transferability from day one.

It’s Emotional

We can’t overlook the personal elements of the end game. A large percentage of horticulture businesses are multi-generational, family businesses. The challenge of preparing the entire family for the eventual transition to the next generation of owners—if you’re lucky enough to have family interested in taking over your “passion”—or a sale to a third party is much more than a financial decision. It is an emotional decision fraught with differing perspectives and expectations. You can’t underestimate the emotional toll the business transition will take on all involved, which makes it important to start the conversation sooner rather than later.

Feeling Overwhelmed?

Beginning with the end in mind starts by assessing your current business, personal, and financial readiness, then defining your goals and ideal exit scenario. Evaluate both tangible and intangible business assets, from your people, customer base, and processes to company culture, and optimize each for peak value. Recognize that just as you didn’t build your business alone, you shouldn’t navigate its exit alone. Get educated and seek guidance from advisors skilled in orchestrating comprehensive transition plans and start building your team, which may include your accountant, lawyer, financial planner, or other trusted confidants. Certified Exit Plan Advisors (CEPAs) understand the complexities and nuances of business transition and exit and are trained to “quarterback” your team and ensure your vision and goals are met. Without this expertise, your dream of stepping into a new phase of life may be just that, a dream.

It is encouraging as we start to see younger attendees at our educational sessions on succession and exit planning. Even though their exit might be 10 to 20 years or more in the future, they are starting to recognize the importance of having the end in mind.

Transition planning isn’t just prudent; it’s strategic. By envisioning your business’s endgame from the outset, you pave the way for flexibility, freedom, and sustained growth, ensuring that exiting becomes a milestone rather than an obstacle.

Join Us at Cultivate’24

We are currently compiling the results of the first-ever State of Succession and Exit Planning in the Horticultural Industry Survey, conducted by PivotPoint Business Solutions and sponsored by Greenhouse Grower. The results will be released on Monday, July 15, during a special interactive 4:00 p.m. session in Room A110 at Cultivate’24. All attendees will receive a copy of the report. Additionally, join us at 9:00 a.m. on Tuesday, July 16, in Room A210 for “What is Your End Game? Succession & Exit Planning Best Practices for the Horticultural Industry.” We will share valuable insights and best practices to help you begin your educational journey.

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