Today I invite you to give some thought to one of the most overlooked and important parts of running your business. That is your plan for making an eventual exit so you can harvest the value you’ve created – and go on to whatever is next for you.
Most entrepreneurs don’t spend any time on this because they are so busy running the business and trying to build it. That’s a mistake. The strategic direction of your company should be driving you to your ultimate exit goal. By not proactively planning an exit strategy, business owners may find that their future options are limited.
Consider it this way: your business is a piece of property that you have invested money in. It generates revenue that supports your life and hopefully a sizable distribution of yearly profit. It should also be increasing in value, allowing you to gather more when the time comes.
There are many different flavors of an exit strategy. Some entrepreneurs consider their exit strategy to be the mechanism by which the company moves from one major stage to the next. Entrepreneurs don’t always quit a company, but their responsibilities do change considerably. This is why it’s important for you to plan your exit strategy and have a clear understanding of what you want to achieve.
There are a few things to consider when planning your exit strategy.
First, you need to decide whether you want to sell the business or pass it on to someone else. This will help you determine the best way to structure the sale or transfer of ownership.
Second, you need to think about what you want to do after you leave the business. Do you want to retire, start another business, or pursue other interests?
Third, you need to consider how the business will continue without your oversight and input. This often involves decoding your “secret success sauce” and company culture. You’re going to need a strategy to ensure the people, process, and technology are in place for ongoing success – and thereby transferrable value.
Fourth, you need to have the input of a trusted financial advisor and accountant to craft a financial strategy to address both taxes and how to meet your ongoing financial needs after you have exited the business. Remember, these professionals will help you manage your money – but their job is not to configure the business for your exit.
Finally, you need to think about your personal goals and objectives. What do you want to achieve with your exit strategy? Do you want to maximize the value of the business, or do you have other goals in mind?
Planning an exit strategy can be a complex process, but it’s important to take the time to consider all of the factors involved. By doing so, you can ensure that you have a clear understanding of your goals and objectives and that you’re able to achieve them.
If you’ve read this far and you’d like to know more about what you can do right now to give yourselves the most options for an exit – whatever that looks like for you, then just hit REPLY, and let’s talk.