Do you have an exit strategy for your business?

As a coach, I have the honor and privilege of working with my clients for many years to improve the health, development, and growth of them in the pursuit of bettering aspects of their lives and businesses. Business owners and entrepreneurs are so focused on their progress and improvement, I have found that owners can often overlook even considering an exit strategy.

Have you considered an exit strategy, and what do you choose to be for your business?

This often neglected topic can allow business owners peace of mind over their ventures. But, business owners often do not feel compelled to craft an exit strategy until something unforeseen happens or especially when their health takes a turn for the worse.

Failing to choose an exit strategy can result in years of hard work being jeopardized. The equity you have chosen to build into your  business can become at risk, or vanish overnight. Here at BusinessLife Global, we suggest that it is imperative to start exit succession planning as early as possible, because you never know when you may choose to implement the plan.

We suggest that, it is essential to choose to be be ready, but how do you do that when you have an empire to run and no time for anything extra?

I suggest to my clients to get connected to trusted exit planning professionals. Network with them and stay in contact to learn what options are available with a choice for the future. It could well make a potential business sale at the appropriate time seamless, with less stress and zero business divestiture deal fatigue, and act as a help for both the buyer and the seller.

Let us again suggest that it is vital to choose to get connected to the right professional support so that if in the event you choose to sell your business and enjoy the return on investment.

A brief look at exit preparation

A key point to remember is that it is never too early to start your plans for exit preparation. A succession plan can be legally be documented and instituted well before the business owner is ready to, or even decides to, sell.

There are three components to complete a successful and smooth exit:

• A business with a program that is ready to be in the transfer process.
• A business owner that is financially and mentally prepared to exit.
• Lastly, a market that is ready and available for the transfer.

To determine whether a business has the three above criteria to exit, a business owner might perform a business valuation process. We preferably recommend a professional valuation to ensure that proper assessment is done. You may bring in a third party professional to help you put a number on your business, which will bring clarity to you and your potential buyers.

This preparation of bringing in a professional business valuation will also set a proper foundation for substantive planning on your team’s behalf for your exit.

Preparation for your exit in three parts

Let us look at three vital components of the development: financial, emotional, and directional. These three parts can ensure that the exit runs seamlessly before, during, and after the sale.

Financial considerations

In considerations of being financially ready, we recommend you consider the following questions, and please note, they are in no particular order:

• What is my business actually worth?
• What are the most likely terms?
• What is the profile of the to-be-buyer? Who is he/she/ are they?
• What are my tax obligations through this sale?
• Will I have to seller finance some of, or all of, the sale?
• What are some of the costs to sell?

Emotional considerations

You may find that the emotional aspects of your exit are much more difficult than the financial aspects. Exiting a business that you have spent years of blood, sweat, and tears to build is very challenging. As an owner, it is advantageous to consider whether exiting is genuinely what you want to, and are prepared to, do.

If you have yet to maximize your earnings, are you truly ready to let go? Other important aspects include the years of friendships you have built with your employees and clients. They may have become like a family, which makes it all the more difficult to walk away from.

Other clients of mine have found themselves at a loss to let someone else take over and do things differently from how you have always conducted your business. When the moment arrives, will you be ready to pull the trigger on a sale?

Directional considerations

Lastly, it is vital to give thought to what will come after the exit and the direction of where you will be after the sale.

Why are you selling the business? Have you become tired?

Seek clear answers to whether you are ready to retire and why you have decided to do it now. What if it was just a matter of burning out? Will you regret your plans for selling?

Having asked yourself these questions, your exit preparation should include other aspects, including what you will do and where you will go next after the sale. Having activities planned for after the exit and having a clear and defined path will assist the decision-making process in a much more efficient and healthy way.

What’s the next step?

Your task, whether you choose to accept that it is time for your exit now or at a later point in life, is to find a good advisor to assist you in all aspects of consideration and planning. The worst action to take is to prolong the preparation so that when you need to, your decision to exit may become unclear.

A great advisor will give you the room and plans to be clear as to when it’s time to sell. If you have yet to plan your exit, it’s never too late.

Here at BusinessLife we are coaching our client/sellers as they prepare their business for sale. Feel free to contact me at peter@marcuscoaching.com