An exit strategy is a plan that guides a business towards long-term goals and allows for a smooth transition to new ownership. Having an exit strategy is important for any business owner as it can be the difference between having a successful sale or not.
Here are five steps to help you create an exit strategy for selling your business:
Step 1: Seek advice
First things first, discuss your plans with family members, friends, and trusted professionals. It’s important to make sure everyone involved understands what you hope to accomplish with the sale of your company — including yourself! Talking things through with others who know and support you will help you clarify your thinking and identify any potential issues before they arise down the road. Make a list of all the things you want in the sale and get input from others on your team. The more detailed your list and your discussions are, the better prepared you’ll be to make sure that everything gets taken care of.
Step 2: Get a business valuation
Knowing the value of your business is a crucial step in developing an exit strategy. You can do this by working with a professional Business Broker to provide an unbiased valuation of your business. This will provide you with a realistic indication of how much your company is worth in the current market, based on competing businesses in your industry and region. You can then create a strategy to increase this number before taking your business to market.
Step 3: Prepare your finances
Another essential step in creating your exit strategy for selling your business is ensuring your business is financially attractive to potential buyers. Prepare your business finances by putting together a budget, tracking key performance indicators (KPIs) and setting financial goals. Seek financial advice from your accountant or other professionals so that you can present a robust business when you’re ready to sell.
Step 4: Create a business plan
One of the most important steps in developing an exit strategy for your company is to create a detailed business plan. This highlights the business’s true value and provides a foundation for future goals and new direction. A detailed business plan will help you define your goals while also providing potential buyers with information about how well-run your company is.
Step 5: Don’t wait too long
If you’re looking for the right time to sell your business, the answer is that there’s never a perfect time. The best thing to do is to get started right away. There will always be areas you could improve, whether that’s expanding the business, increasing marketing, or improving the finances. Having an exit strategy allows you to set the business up for future success which a new owner can guide the business towards.
When you’re ready to sell your business, don’t wait, get the process started. The earlier you create your exit strategy, the easier selling your business will be!
