Exit planning for your business
Are you excited or do you dread the thought of exiting your business? Where are you right now in the process of someday exiting your business? Chances are you probably haven’t given it much thought. If so, you are like many owners who have failed to develop an exit plan because they are too busy or they take the view that they will sort things out when they’re ready.
This is a huge mistake and will cost you dearly if you wish to achieve a profitable sale.
So putting together an exit plan that grows and strengthens the value of your business, to achieve a profitable sale, makes good sense whether you intend to exit your business in 1, 5, 10 or 20 years’ time.
But let’s not think of Exit Planning as something additional we need to do in our already busy business day – it’s not. Put simply, an exit plan consists of a strategic plan (a roadmap) for growing the value of your business integrated with your personal and financial goals and objectives.
When it comes to establishing personal and financial goals think of establishing three principal Exit goals by asking yourself these three questions:
- How much cash do I need when you exit to support the lifestyle you desire?
- When do I want to leave the business?
- To whom do I want to sell/transfer my business?
Download our free planning templates – click here
Exit planning strategy
In terms of strategy, putting aside the process of building a strategic plan for the business, your successful exit is based on asking yourself the fundamental question: what do I need to do now and in the future to grow the value of the business?
In answering this question there is no one-size fits all approach but there are key areas that you will have to deal with. Where you are on the business lifecycle will determine which of these key areas you will need to place most emphasis on. With that in mind here is a list of four key areas to ensure success.
1. Create a solid plan
Create a solid plan that matters to customers and differentiates you from your competition – a roadmap for growing the value of the business. Begin with the end-in-mind. The plan will provide you with clarity and focus, making it clear what you should be doing and in what order. Then you must take action – put in place the right disciplines to run your business: a handful (3-5) of priorities, measure your results and recalibrate where necessary. Involve your employees at all levels in your planning and hold them accountable for achieving your goals and objectives. Be transparent and establish a rhythm of meetings to keep them informed of the business progress toward these goals.
2. Develop a strong leadership team.
Invest in and educate your team – along with yourself. Read more about this in our follow up article.
3. Build a business that can grow without you.
Don’t try to do everything yourself. Having a business that depends on you is practically worthless. You may be good at many things, but not everything! Be willing to change your role, to take a more strategic role and embrace a different way of thinking that accepts having less direct control over results. Hire people who are smarter or better than you in critical areas of the business and learn how to delegate. Pay attention to developing and deploying scalable systems, processes, structure and a culture that supports day-to-day operations and the achievement of your goals and objectives.
4. Build a fortress balance sheet.
Manage cash with even greater fervour than you pay attention to revenue and profit.
Founding your business requires an entrepreneurial mindset that is tolerant of risk, hungry to overcome obstacles and willing to absorb the stress that comes with owning and running a business. As you build you have no doubt often been overwhelmed by a series of growing pains. From feeling there are not enough hours in the day; spending too much time “putting out fires”; feeling that you have to do it yourself if you want to get it done correctly, to balancing your work life with your personal life.
These responsibilities can be draining. And though it seems counterintuitive, focusing on accelerating growth in business value by beginning to implement your exit strategy now can help relieve some of these stressors, reignite your passion for business ownership and lead to a profitable sale.
Planning to exit your business is a new process for many business owners – seek professional help and guidance from experts and professionals who can share their experience and knowledge with you along the journey.
Exit planning thoughts from Yorkshire Powerhouse
Now you’ve read our article about exit planning – have you any questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
It is never too early to start thinking about your business exit plan. A planned exit will always be preferable to one that's forced on you Read >