When talking with business owners about their future, one statement of the obvious is: at some point in the future you will no longer own this business. So why not plan for the best possible transition now?
Your exit from your business can be a strategically planned, hugely positive and rewarding experience. If left to chance or left too late the outcome may be underwhelming and potentially lead you to sticking around longer than you want or longer than you can add any real value.
Not many business owners have an exit plan. In fact, in our own experience, less than 10% do. So that kind of proves the point – if the majority don’t have an exit plan you don’t need one either.
Take on the other hand less than 20% of business owners achieve the valuation they expect when they sell some or all of their shareholding. Coincidence? We don’t think so.
But the fact remains, you don’t need an exit plan.
You know that at some point you will no longer own or run your business – nothing contentious about that statement. You may not know quite how much you can influence how and when that will come about and therefore how well you and your family will be ready for whatever comes next in your lives. This is about you.
But your business exit is also about your business, your co-owners, your team and everyone else involved and dependent on the company you have built. So, when considering your next stage of life and the part your business will play you have a lot to think about.
When you started your business, however long ago, what did you set out to achieve? Did you plan your exit i.e. stepping back from owning and running your business, or a sale – or didn’t you consider it back then?
And what about now? Do you have the sensation that ‘time flies’ (when you're having fun!) and the business has its own life and momentum now? When do you now think you might step back? Will you have achieved all you want (or need) to support the next stage of your life?
Promoting and presenting an attractive business increases desirability and supports better sale values. At the end of the day, we are dealing with the basic principles of how to successfully sell a product or service – in this case your company. There are a lot of aspects to consider - that is why you need an exit plan.
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We all know that the best results usually come from having a well-designed and executed plan. If your eventual exit from your business is important to you, your future and that of your family, you will want a good outcome. That, then, means having a plan.
All too often the two things (outcome and plan) don’t seem to get connected. For various reasons many business owners put off planning their exit until they are ready to sell – at which point there is a lot less chance to make a difference to the outcome.
How often have you received an approach from a company telling you they can help you to sell your business?
Perhaps it offered you a place at a seminar or a ‘free consultation’ with an expert in valuing your company. Where did the letter or email go? Was it set aside because one day it may be useful, or put straight into the bin?
You head to the exit when the performance is over. There is a sense of finality, a transition from one state to another, perhaps a feeling that there is nothing more to see or do.
But if you have more to achieve in your business the thought of an exit plan may feel premature. You might question the value of spending time and energy on planning when the next phase of your life seems very distant.
When is the best time to start your exit planning? When you are ready to sell or retire is too late, but can you start too early? The simple answer is ‘no’.
To quote Stephen Covey, “To begin with the end in mind means to start with a clear understanding of your destination. It means to know where you're going so that you better understand where you are now and so that the steps you take are always in the right direction.”
We have talked to other business owners and they are taken aback that we forecast our revenues, costs and cash flow
We’ve written a number of guides on selected business subjects that will set you and your business in good stead for whatever future you may choose.
These are free for you to download and to make use of in your business, so please help yourself.