There are two ways you could exit your business: voluntarily or involuntarily. One way or the other, someday you will leave your business. With good exit planning, either can be done profitably and with ease.
I believe your first goal should be to decide if you wish to leave your business at all.
Many business owners prefer to work as long as they can. Others want to work until they can just step aside and passively own a well-oiled, smooth running business, leaving day-to-day operations to others. Either can be down with proper planning. Preferably with plans that include the flexibility to exit if that option becomes necessary.
If you dream of the day you can exit your business there are four ways to exit voluntarily:
- Pass the business to family members
- Pass the business to employees
- Sell the business to an outsider
- Liquidate the business
Your goal, I think, should be to exit the way you desire, but with plans in place that account for the unexpected. Therefore you should take steps that allow you to control how you leave the business, either unexpectedly or as planned. The only way this won’t happen is if you fail to plan now.
When time comes to leave, your preferred plan will be executed if you have planned for it. Exit planning is often a multi-year exercise with several steps along the way. This is what I suggest and what I assist owners to put in place:Decide if you want someday to exit your business or to become a passive owner of the business.
- Develop systems that others can follow when you leave.
- Develop a management team that is capable of taking over the business should you decide to pass it to them.
- Create consistent profits so the business is attractive to new owners and that would fetch the price you want.
- Install plans to keep your key people in place.
- Establish and monitor crucial performance and financial indicators regularly.
- Write and continually update your company history.
- Include tax planning in the event of your exit.
- Starting with a business valuation, put financial plans into place for both before and after you exit, to assure your family’s financial security.
- Have a plan in place for yourself, in case you leave the business.
If you begin now, and systematically follow your exit plans, you will be more likely to exit on your own terms and on your own schedule. I offer a complementary exit planning assessment. Click on this link if you wish to discuss it.