This season we look at what is involved in exiting a business; when to do it and why it is so important to get it right. And, we will speak with four key players who know the value in getting your exit strategy right.
All too often business owners only start thinking about their exit strategy immediately prior to the sale. But this short sighted approach exposes you to avoidable risk and can mean that you leave a lot of money “on the table”.
In episode 1, Ed speaks with Martin Checketts, author of The Strategic Exit, about his top five issues to make or break a business exit.
1. A successful exit is planned
You can’t just give a house a lick of paint before you put it on the market. The same can be said when preparing to sell your business. However the process for selling a business is far more complex and should be something that business owners think about from day one – how am I going to successfully exit this business and obtain the best result?
2. Operate your business as a steward for the next owner
Stewardship of a business is all about reinvesting building your business for the long term.
3. Reduce dependence on yourself
Most private businesses have a problem with key person dependency. This causes serious issues when it comes time to exit the business, as the best thing about the business, (you, the owner) is going to walk out the door. This can diminish the value of your business and create headaches for the incoming purchaser. Reducing key person dependency is not something you can fix in a couple of weeks – it takes a long term plan.
4. Timing is everything
When you are looking to exit your business, you must ensure that the timing is within your control. Where the timing is taken away from you, for example due to health issues, things rarely end well. The sellers who get the timing right are the ones that make so much more than the ones that get it wrong.
5. Ensure that your business and life goals are clear and alignedIf you want to know more about successfully exiting your business, get your free online copy of his eBook “The Strategic Exit” here
Business is part of what you do in life – but it isn’t the only thing. Business owners need to be psychologically ready to move on, and that means having something to move on to. To ensure a successful exit, it is essential that business owners consider their personal objectives, those other people that the exit will affect, and what they will do next. Until a business owner is excited about that next step, it can be very hard to move on and complete a successful transaction.
*Please note that Martin and Ed’s business exit strategies are general in nature and do not take into consideration any of your personal circumstances. Further, Martin and Ed are not financial planners or accounting experts. You must seek individually tailored advice to ensure you properly prepare for your business exit.