Posts tagged with: exit strategy
Most business owners will see the title here and skip the whole thing. After all, they’re too young and too busy in the business to answer questions about their exit strategy. Why should they start planning their exit strategy now?
You’re not one of them. That means your eyes have been opened to the imperative of thinking about your exit from the outset – or at least from today forward.
You realize that you have no intention of working this hard for another 5, 10 or 20 years. You’ve built a business you are proud of, that rewards you nicely today and you want to be able to walk away on your terms on your timeline.
Sounds simple and reasonable. But for many logistical, emotional, and financial reasons, it can’t happen overnight. Unfortunately, most business owners neglect the topic, don’t consider the decisions, and leave the process to the last moment. Unlike their decisive leadership that got them to this point, they’ve sidestepped the following questions for various reasons. You don’t have to.
There are five key questions about your exit strategy you do want to spend time considering, and exploring the tradeoffs of different answers. Sometimes the answer to one dictates the answer to others, but if that one answer changes, you open up other latent possibilities you’d never thought of before. When you lay out your answers to these questions, you will be in a better position to take timely steps and integrate all the necessary elements for your exit. You will be in control of effectively negotiating a successful business transaction to achieve your optimum exit.
Here are the first two questions about your exit strategy:
1. How much longer do you want to be actively involved in the business?
Vague answers like ‘at least 5 more years’ are a way to avoid the question. Dig deeper. Maybe it’s easier to look at what you want to accomplish in the business before you’re ready to walk away. This date is important because it triggers every other action, trigger and date along the way to get there.
Most successful exit transactions take long-term strategic planning. They can’t and don’t come together in 60 days. You must start the process before you ever thought it would be necessary because it takes far more time than you imagined to line up all facets to suit you.
To maximize the value of your business when you do exit, you need to have a clear goal for the company and for your own/your family’s future.
2. Who will be your likely successor?
Have you thought about who should be your successor? Should it be your children, one of your children? Should it be your employees? Or would you look for a buyer well-suited to the business, who can take it to new heights? Maybe you think it’s in your customers and staff’s best interest to be acquired by an industry giant or your biggest competitor?
There are many options. What’s optimal depends on you, your goals, your industry, your company culture.
I’ll post the other three questions you need to answer shortly.