We often postpone making important decisions in life until a situation changes. One area where many business owners procrastinate is business exit planning and preparation.
In business, we place a strong emphasis on decisions that will affect the present, such as those related to:
Especially if you have no immediate plans to sell, it doesn’t seem like there is a pressing need or good reason to develop an business exit plan and strategy.
You must not feel smug about shutting down your company. As a result, the endgame must be on your mind from the beginning. In fact, it may take years to execute a good departure.
The vision for you and your business becomes clearer the earlier you develop a business exit plan and strategy. These 9 reasons will help you see the advantages of developing an exit strategy early for your business’s present and future if you don’t now value it.
Don’t undervalue the significance of having all your paperwork organised. If you are focused on expanding your company, you might not be aware of all the documentation required to support a successful due diligence process. Although you don’t want paperwork for the sake of having it, you do need to prove what you are buying in the event of a sale.
Investors want to be sure it’s a solid investment for them before they put money into your company. Investors may be driven to invest in a business for a variety of reasons. Such as, to cover a gap in their current offering of goods or services. It is because you have a technology or method they can capitalise on. Or, because the company is a safe, reliable investment.
There are many reasonable reasons. Be aware of your value to potential investors will enable you to safeguard and emphasise it when investors analyse your offer.
Although it might seem simple, do you know how much your company is worth? And does that guarantee your future?
This is harder to figure out than you might think. You must identify your intangible assets. Also, compile a thorough record of your recast financials covering three to five years, and assess the state of the market. You must also pursue ideal customers, who are willing to spend more for your business since it aligns with their strategy.
You can determine the value of your business through a thorough evaluation. But, you won’t know if you’re on track to meet your financial objectives. Or, if adjustments are necessary to meet your expectations. Or, needs until you combine this information with the objectives outlined in your exit strategy.
Knowing your company’s present worth can help you assess whether it can protect your future and the future of your investors.
Make a careful financial analysis so you can understand what makes your company profitable. Also, how it might become more profitable. To appear to be meeting your financial forecasts and goals, look for issue areas and address them. Investors will always be more drawn to successful organisations with financial records that show wise selections were made during due diligence.
Protecting your most valuable assets becomes even more crucial as the moment for withdrawal draws near. You don’t want to lose key employees or crucial contracts at a time when investors are scrutinising your company. If you can foresee any problems, you can take precautions to increase security.
Who must be involved relies on how your business is set up, but you can opt to include or remove anyone who is not strictly necessary. This is dependent on some elements, such as the exit strategy you’ve chosen, the culture of your organisation, the type and stage of your business, etc.
You don’t want rumours to worry your workforce, and any kind of upheaval can frighten people, especially in a long-running company. Just keep in mind that the larger team’s experience with this procedure also needs to be managed.
You can be more prepared for the business sale negotiation if you have an exit strategy in place.
The goal of buyers is to maximise their return on investment. While you need a buyer who will make you an offer that reflects the genuine value of your company. Being ready will help you spot genuine offers and be able to move fast when the perfect opportunities present themselves.
Do you envision leaving the company with a huge check in your pocket? Would you like to continue working there but with less responsibility and more financial security?
You’ve visualised what you want to happen regardless of the possible results. Remember this and aim for that result.
Even though it’s going to be unpleasant, you may lessen the stress by being organised and self-assured.
Developing an exit strategy focuses on the future and might identify key moments when you will be prepared to leave. It can support your business plan and help you stay on pace to meet your growth and exit objectives. Knowing your company’s future exit strategy might help you set clear objectives and divide resources. Visit BGES to learn more about how to get part-time executive director help from advisers who have sold businesses and who can assist you in developing your business exit strategy.