Preparing for your eventual departure from your business can be an emotional process. Whether you are selling to reach a financial goal, start your retirement or begin a new venture, you need to develop an exit strategy. After all of the effort put into making your business successful, you don’t want to leave it without proper planning. The best exit strategy prioritizes your personal goals without putting the company at risk. Here are some tips to creating a balanced strategy.
Decide How You Want Your Future to Look
What do you want your life to look like after exiting your business? Are you looking for a partial exit, where you step down from your role and allow someone else to take over? Are you looking to retire? If so, how will you spend your retirement? These are all important things to consider about the next stage of your life. They will determine how you exit your business and the steps you take to get there. To set yourself up for success it is crucial that you have a plan for how you will spend your time when you aren’t always working. Business owners who retire without a plan for how they will spend their time often end up feeling lost and unfulfilled. You also need to budget for the lifestyle you plan to have after your exit.
Budget for Your Future
Your financial needs will vary depending on what your next step will be after leaving your business. If you are planning to retire, fund a new business, or achieve a financial goal, check your cash flow and current expenses to figure out how much you will need. For retirees, you will need to calculate what you will need to live comfortably, or sustain the lifestyle you want to have. If you plan to sell within the next few years, start to eliminate debt, so you can increase your overall profit when you sell. When you sell, you can also choose to offer seller financing, which could provide you with a steady income stream after the sale. Whatever you are budgeting for, the more you plan ahead, the better. Knowing what your business is worth can help you figure out how close you are to your goal. A business broker can help you to value your company based on tangible and intangible factors, and allow you to properly budget for your future.
Choose an Advisor
A business broker can provide you with a wide range of services to help prepare for your eventual departure from your company. They have experience working with a diverse set of industries and different sized businesses. A broker can help you to align your personal and financial goals and structure your exit plan. They can provide advisory services on how to add value to your business so you can maximize your profit from its ultimate sale. Most importantly, they can help you to market your business for sale and find the right buyer.
Find a Buyer or Successor
You might have already decided on a successor for your business. This can be a relative, an employee, another company, or someone you haven’t met yet. Focus on finding the right person to execute your ideal future for the company. Think about what is important to you, whether it is the reputation of the company, your staff, or something else, and target buyers who share your vision. If you’re not ready to step away completely, or want to sell a share of the company instead of the entire thing, you will need to find someone who is willing to work alongside you in your new role. If you don’t already have a successor in mind, business brokers have lists of pre-qualified buyers who are already looking for a businesses, and may already have a match for you. If you work with a broker, they can help you to find the right buyer for your company, and allow you to continue to run the business while they do.
The ideal time to start creating an exit strategy is when you start your business. That does not mean your plans cannot change. You might think you are too far away from leaving your company to even begin thinking about it. The reality is that life is full of unexpected events, and having an exit plan, even if it is just a rough one, is better than having no plan. Health complications, financial hardship and industry changes are just a few things that can derail or accelerate your plans, as the last couple of years have shown us. Creating an exit strategy forces you to create goals for yourself and your company, which allows you to set your business up for success and prevent you from having to sell it before you are ready.
If are ready to begin planning for the departure from your business, Corporate Investment Business Brokers (CIBB) can help. Headquartered in Fort Myers, CIBB has been helping business owners throughout the Southwest Florida region with exit planning for over 35 years. Contact us to get a free business valuation estimate and no-obligation consultation. This free service will bring you one step further to solidifying your exit strategy and selling your business.
Looking to Sell a Business?
Complete the form below to find out what it’s worth with a FREE, no-obligation, 100% confidential business valuation estimate.