Whether you are in full growth mode or your hair has turned a lighter shade of dark with a tinge of silver the answer to the often-asked question, “when should I start planning my business exit?” is NOW.
Too many small business owners don’t prioritise planning their exit. Excited with the many challenges and opportunities in front of them that no time is left to plan an exit. Others think, ‘if my business is profitable the sale will inevitably take care of itself’. The latter is true to an extent but with a little time, forethought and effort business owners can better prepare for their exit whether it be in 1 year, 5 years or 10 years from now.
Whether or not you even plan to sell or retirement feels a lifetime away being prepared for the event in which a sale is forced due to unforeseen circumstances can provide much needed piece of mind. At the end of the day, most of us get into business to secure the future of our families and loved ones so why wouldn’t you put some planning into protecting it. A forced exit brings with it a range of contingencies but a well thought through exit strategy can help to mitigate these.
Now before you start snoring, or going through the many reasons most business owners tend to put off planning their exit I’ll leave you with a few tips to help you get started on developing your exit strategy and getting clear on where you are headed.
Tip 1: Start now – Be proactive as opposed to reactive, visit your accountant/trusted business advisor and get to developing that plan today.
Tip 2: Make capital improvements – just like when selling a home you want to make improvements to make your business more attractive to potential buyers.
Tip 3: Systemize your business. Nearly every business no matter the industry can in some way put this tip to work. Strong systems make for a far more saleable business to a far greater number of businesses.
Tip 4: Know your target market – you may run a family business that you are hoping will be passed on to an heir, what does this mean for your exit or succession?
Tip 5: Improve your bottom line. This goes without saying and you are most likely working on this anyway but a strong net profit always makes for a more appealing purchase.
Tip 6: Be open with family, staff members and other involved parties. Communication is key and developing a plan where all stakeholders are taken into consideration can help to instill trust, a common goal and a shared vision for the business now and a time of exit.
New Zealand is full of wonderful small businesses working hard to make a better life now and for future generations. Make sure you have your exit strategy in place to better secure your own future and that of your loved ones.