It takes a lot of work to build a business from the ground up, and it takes just as much preparation and strategic thinking when it comes to planning your next move and exit strategy. The right exit strategy can help you realise the value of the business you have worked hard to build. However, we see all too often a lack of succession planning…
Planning Your Exit Strategy
Every business owner will eventually exit their business for a variety of reasons, including:
- Decreasing profits
- Increasing competition
- Changes in health or life goals
- Passing it on to family members, or
- Cashing in on your goodwill and success
Succession planning can quickly become a lengthy process, which is why it is good practice to start thinking about these things sooner, rather than later. Exit strategies often involve various financial, legal and operational obligations. The idea is to have your business in the best possible shape before you exit, placing yourself in the greatest position to benefit financially from the exit. There are a number of different ways business owners can plan their tactful exit. We have listed the most popular methods below:
Have you spent many years building your empire, developing and growing your business? The prospect of listing your business for sale to the open market may not be as appealing as passing it on to someone you know and trust. This type of exit strategy is known as succession planning.
Succession ensures the ongoing success of the business through a smooth transfer of ownership and control; however, this requires A LOT of thorough planning. A formal succession plan must define exactly who, when, and how the business will be taken over. This is something that can be workshopped with your financial planner or business advisor.
Planning for retirement as a small business owner? Read one of our previous blogs, here to learn more about this process, and what you need to know to be prepared.
Make Yourself Redundant
For many business owners, their businesses is heavily dependent on them personally keeping everything running and working cohesively. Therefore, when the time comes for the owners to move on, selling the business becomes very difficult; without the owners, there is nothing to sell. This is why the best managers work to make themselves redundant. Placing the right people and processes in place so that the business runs independently is key to a successful exit strategy.
Building a Saleable Business
Find a driven Manager/Management Team. Handing over the reins takes a lot of training and trust among the owners and management team. By handing over the reins to a manager, it allows you as the owner to either retire happily, or focus on other business interests while still enjoying the profits from your hard work. This also means that if things happen to go wrong, you are able to step in.
Preparing to sell your business can often be an overwhelming process. Which is why at Verified Businesses, we try to take as much stress out of the equation as possible. Having all your “ducks in a row” will increase the chances of a sale, reduce the doubts that may arise in a buyer’s mind and prevent possible hold-ups when you do receive a contract. We have developed a list of all the things you’ll need to keep in mind when preparing your business for sale, here.
It’s always important to think about the right kind of buyer for your business. In general, there are three different categories of buyers: strategic, financial and owner operators. Understanding these buyer types can help you to find the right buyer for your business. You can read more about them here, in our previous blog Tips on Selling Your Business to the Right Buyer.
Thinking of selling your business? At Verified Businesses, we are the leading Business Broker on the Sunshine Coast and we have an enviable reputation within the local business community.
Want to know more about how to sell? Contact our friendly team at Verified Businesses for your own information pack or to book a consultation today. At Verified Businesses, success in business is Verified.