Planning Your Exit

As a business owner, you have your hands full. You put in long hours on day-to-day management, trouble-shooting, talking to customers and handling all the other tasks that are part of the entrepreneurial experience. You love it, but you know you’re not going to run the business forever. So have you taken the time to plan your exit strategy?

You may already know what kind of exit you want – sale, acquisition, passing the company on to employees through an ESOP, passing the business to your heirs, or some other option. You may also know what you need and want to get out of the business when you exit, in order to have the kind of retirement that you want. But do you have a plan to reach your exit goals? Here are some steps to follow.

Step One:

If you don’t know the answers to how you’re going to exit and how much you can get from your business, start to figure it out – sooner rather than later. All exit strategies have very different tax, financial and other implications, so it’s critical to get professional input when determining your goals. The key here is to determine a definitive goal. As author Stephen Covey says, “Begin with the end in mind.” You can’t create a strategic plan if you don’t know where the plan is designed to take you.

Step Two:

Determine the current value of your business. You have to have a starting point in order to strategize a path to your ending point. Remember, the value of your business is what someone else is willing to pay for it, not what it’s worth to you, so hire a valuation expert to get a formal valuation.

Step Three:

• Build your strategy to grow your business to the value you need to achieve your exit goals. This process is going to have many requirements.
• Start looking at your business as an investment that needs to increase in value, and manage it accordingly.
• Consult with professionals, such as your CPA and your attorney, about formal steps you may need to take now and going forward.
• Assemble a team of experts that you can consult to help you create and implement your strategic plan. Your team may include your CPA, who can help you with tax planning, succession planning and related issues; your CFO, who can help you understand the financial side of your business, maximize the cash flow of the business, connect your strategy to your numbers and play a key role in designing your long-term growth strategy; and an advisory board or strategic adviser to help you with strategy and execution of your business plan.

All professional services come with a cost, but when those services are helping you increase your revenue, your cash flow, and ultimately, the short- and long-term value of your business, the fees that you pay advisers become an investment with a very positive return.

A strategic team approach will help you to reach your exit goals so that, when the time comes, you can retire on your own terms. Your hard work will have paid off, and you’ll be able to enjoy your time doing the things you’ve always dreamed of doing.

For more information contact Darren Cherry at [email protected]