Planning Successful Business Exits
A common question for business owners is “When should I begin planning for my exit from my business?” The correct answer is “When you decide to start or buy your business.” The smoothest and most profitable exits are planned years in advance. An even better way to look at this issue is “Begin with the end in mind.” Once a business owner is occupied by the day to day operation of their enterprise, planning for a sale or succession often takes a back seat.
Since most business owners don’t intend to work until the day they die, and because none of us know when that day will arrive, the time to start planning for your exit is today!
How To Develop A Successful Exit Strategy
In order for a business to be attractive to purchasers or successors, it needs to display several key characteristics:
- Positive, documentable financial statements
- A history of growth, with future continued growth potential
- A strong employee and management team
- The ability to continue to effectively operate in the absence of the owner
- Brand value above and beyond positive cash flow
If these characteristics don’t currently exist, a plan must be put into place in order to remedy any deficiencies prior to being able to exit the business.
In many cases, an unexpected opportunity (or an unexpected need) to exit may arise. Without a solid exit plan in place, having to leave the business suddenly could significantly reduce the value and future success of a business that took years of effort and capital to build.
Whether the goal is a sale, succession by family members, or retirement from active involvement while retaining ownership, Look Ahead helps clarify exit strategies, identify deficiencies that reduce enterprise value, and protect owners from the pitfalls involved in exiting their businesses.