Successfully exiting a business is a dream for many owners. Follow these ten steps and you’ll be in great shape to make your dream become a reality.
Many entrepreneurs desire to build and sell a thriving business. A financially successful exit is certainly achievable, but it requires several years of hard work and planning. Many business owners fail to think about how they’ll exit their business until they want to leave.
Here are the critical factors to consider when planning your exit, as well as actions you can take to increase the value of your business before you put it up for sale.
1. Decide when to depart
Plan well in advance and consider family, finances, your health, any business goals you’ve yet to achieve, and the state of your industry. If you wait until you are ready to exit, you might spend several more years working before you can actually leave. Choosing an exit date early on, even if it is an estimate, will help ensure you can depart when the time is right.
2. Map out your exit strategy
Once you have determined your departure date, you’ll need a plan to ensure a successful exit. Make sure you ask yourself:
- How much time will I require?
- What tasks do I need to accomplish on my journey?
- Who do I have to prepare or involve in the process?
Be thorough in your planning so you can avoid surprises for you, your employees, and your buyers. A detailed and well-thought-out exit strategy will be a successful one.
3. Prepare your business in advance
Don’t focus on building a business you can exit. Instead, focus on building a successful one. One helpful activity is to forecast your expected net profit over the coming year. Assessing the health of your business will enable you to take the right steps to make it successful.
By increasing your business’s value with continuous growth, a good revenue line, and a large customer base, it will become very attractive to potential buyers when you desire to exit.
4. Create an operations manual
Make sure a new owner can run your business without you present. Include simple, day-to-day actions, how you create the culture of your organization, and your process for making important decisions. While they may perform some operations differently, you want to ensure the mission and vision of your company remains and your business legacy thrives into the future.
5. Speak to your suppliers
Prepare suppliers by letting them know your intentions. If possible, introduce the new business owners to them. Maintaining positive relationships with suppliers will benefit you in any future business efforts and will help ensure your company’s success when you are gone.
6. Talk to your staff
Take time to develop your staff because buyers will find a strong team attractive. Your staff will want to be informed early on if you’re planning to sell or hand over the business. Some of them might even be interested in taking over the business themselves.
Whatever the situation, it’s important to involve your employees in discussions early on in the process, so they don’t feel left out and irrelevant.
7. Build loyal customers
Buyers want ‘regulars’ walking through the door from the moment they take over. Excellent service is key to developing customers who keep coming back. Over-delivery service and you’ll generate positive word-of-mouth and your customer base will grow.
8. Write a timetable
Although it can take years to build a business ready to sell, things can move quickly when the time to exit finally arrives.
Create and follow a timetable to keep on top of everything. You don’t want to miss important meetings with experts or potential buyers. Once a deal has been made, a good timetable will help ensure a transfer of ownership that benefits your employees, business, and yourself.
9. Use expert help
Exiting your business will involve a lot of people, paperwork, laws, and money. Enlist the aid of your accountant, lawyer, insurance agent and mentors to make sure nothing is missed or forgotten, and you enjoy a smooth transition. You might also consider enlisting a business broker.
10. Final checklists
Create a list of all tasks and paperwork that will need completing. Include documents requiring a lawyer, accountant, counsel, or anyone else. Check and double check that everything is in order. Having a second pair of eyes can make a tremendous difference, so ask for expert help as you review everything.