In last week’s article I talked about how exit planning doesn’t necessarily mean selling your business. Rather, a good exit plan is an important business planning tool, helping you build a more valuable, efficient (and, yes, sellable) business.
Here are seven reasons to start thinking about your exit plan now:
You’ll have a better-run business that’s less dependent on you
Too many owner-managed businesses are completely dependent on the business owner. Not only does this limit the value of your business, it can also inhibit business growth or your personal aspirations. Strengthening your management team, redefining roles in the business and other exit planning-related activities will help you create a more independent business.
The business will be more resilient, with stronger management and controls
Developing the management team and implementing controls like measurement and reporting is a critical part of exit planning. This improves the day-to-day running of the business, and provides compelling evidence of success for potential buyers and investors.
You’ll be better prepared to deal with any unexpected approach to buy your business
This can happen at any time and without warning. If a buyer surfaces out of the blue, how prepared are you to handle the approach? If you’ve never thought about exit planning, how can you expect to secure the best outcome for you, your family, and your business?
The business will be more attractive to investors
Say a new market or opportunity arises and you want to raise the necessary finance by attracting an investor. If this happens, you’ll be glad you spent time on your exit plan. After all, investors want to see a well-run, valuable company that has strong management and controls and isn’t wholly dependent on one person at the helm.
You’ll be better positioned to raise money with a loan
Going to the bank manager for a loan is another way of raising finance to fund business expansion. Because exit planning involves developing your business to make it more attractive and valuable, your bank manager will see a thriving, efficient, profitable business – in other words, a solid investment.
You’ll be in a stronger negotiating position in any business partnership discussions
Whether bringing in a new business partner as part of the management team or collaborating with another business, partnering can be a great way to move your business forward. A strong, healthy, well-run business is an attractive prospect for any potential partner.
You’ll be in the best position to extract maximum time and value for you and your loved ones in the future
Even if you aren’t looking to sell now, one day you’ll probably want to release some of your time (i.e. step back from the day-to-day running of the business) or extract some of your money to fund exciting new ventures – business or personal. Exit planning gives you the freedom and flexibility to do this.
Ultimately, having a good exit plan in place will help you to build a better business. Read more in our exit planning white paper, Cash today, wealth tomorrow, or drop us a line to kick-start your exit plan today.