The swan is often seen as the archetypal image of a graceful person or business – beautiful and serene, as far as anyone can see, but paddling furiously under the surface. But while this may be a good description of how your business manages the daily ups and downs of customers, suppliers and technology – this is not a recommended approach when it comes to exiting your business.
The secret to making a graceful exit from your business is proper planning and plenty of time… in fact it has been said that the first thing you should do when starting a business is plan your exit! We might not go that far, but you get the idea that you should plan well in advance of wanting to take that step.
Exiting your business – Why plan ahead?
It’s an all too common story, an entrepreneur who has worked hard on building a business they are rightly proud of but hasn’t given any thought to an exit. They quickly discover that when the time comes, the terms of their own exit are being dictated to them rather than being master of their own destiny.
Of course, it isn’t just about the owner… a company sale has an impact on all stakeholders – from loyal customers to dedicated staff. While your primary motivations might be personal, I am certain that knowing your staff and customers will be well looked after is an important consideration.
A hasty sale that is not properly planned will impact on three key areas that drive the mechanics of a good sale:
- Timing – an ideal scenario is to be able to take the business to market when you are ready to. Planning towards a goal will allow you to avoid the perils of feeling you have to take the first offer that comes, even though you are not ready; or even worse, missing the boat and getting trapped in a business you no longer want to be in.
- Choice – one of the most powerful advantages when it comes to a sale is the element of choice. Planning your exit properly will ensure you attract a strong pool of credible acquirers to choose from.
- Health – the health of your business at time of sale will dictate the valuation ranges you can realistically expect to receive. Effective planning will allow you to take your business to market when it is in its prime.
But where it all starts is in being able to articulate one very important piece of information…
Knowing what you want when you exit your business
What do you want, is a very important question and the first step to planning your exit. Why not do this exercise right now?
- Take a piece of paper and write at the very top in capital letters – EXIT GOAL, then write down what you want to do when you exit your business. For many this will be to retire, for some it will be to reinvest, or pursue other interests.
- Under that write AGE and put down the age you would like to be when you achieve this exit. If you are already that age, or it has already passed, don’t panic – we can still help, send me an email and let’s talk.
- Next, write two lists. In the first list write down what you think you need in order to pursue your goal. Try to avoid financial detail, that will come later, for example if you plan to invest then write down “investment capital”, but not how much you might need.
- In the second list write down what you think your business needs in order for you to be able to exit. Again, try to avoid financial detail at this stage. Broad terms are fine, for example; “increased sales”, “stronger management team”, “increase diversity of client base.”
You now have the beginnings of an exit plan – you know where you want to go, how long you have to get there, and a rough idea of what you need to put in place achieve it.
The details of your successful exit
Of course, where most planning exercises get stuck is in the details. This is where we would recommend getting some professional advice. Our recent blog: Can’t See The Woods For The Trees, explains the value of independent advice. A combination of good advice from a company like Entrepreneurs Hub and a wealth management professional will help you put some figures on those plans and we can also help with putting those plans together and seeing them through.
If you want to find out more, then please get in touch; free and with no obligation. Or why not attend one of our confidential and discreet webinars? Register here.
