Growing Your Business to Exit
A wise observer once stated, “Every business owner will exit their business. Whether by careful planning or by force of circumstances, it’s your choice! Take control of your destiny and exit on your own terms.” Most business owners are so busy running their businesses that the thought of preparing an exit strategy never comes to mind. Why is this so true?
We probably think we will live forever. We don’t think we will get sick or become disabled. We don’t visualize future financial problems. We are enjoying running our business and cannot believe we might some day have burnout. We do not foresee disputes with business partners. We do not foresee personal problems.
Often we are simply coasting along with no growth plan or preparation for an exit. Operating without a growth plan will likely lead to a downward trend in sales and profits. Then, the desire to sell comes too late when potential buyers would not be interested in your company.
Simply stated, the best exit plan starts with a ‘growth plan’ for your business:
- Do you keep your financial books up-to-date? This is the first thing a prospective business buyer will want to see.
- Do you have a marketing plan that is regularly revised as market conditions change? Are you analyzing your competition and the economic climate?
- Do you have an operations manual showing all of the details of how your business operates? An up-to-date operations manual will add much value when the time comes to sell your business.
- Is your business set up in a legal form to facilitate top dollar after taxes when you sell? Work with your CPA and tax attorney to determine the sale structure before you offer the business for sale.
- Start thinking about a target date to exit your business,
- Do not procrastinate, even if you have children who will take over. Determine the best way to transfer your business to a family member, co-owner or employee while paying the least possible taxes and receiving the greatest financial security.
- What other steps can you begin to implement now to increase the current and future value of your business?
Begin growing your business with positive growth action. When exit time comes (not if, but when) you will be better prepared to get top dollar for your business.