Successful business exit planning does not look the same for every company, but one thing is consistent: The toughest part is getting started. Here are three tips to help business owners over that first big hump:
- When to Start
- Where to Start
- Who Can Help
When to Start
As noted above, the recommended time horizon for successful business exit planning is 2-6 years. But because of the other benefits of the process, it’s never too early. The time to start is now. That’s how you can ensure that you’ll be ready for the sale, even if the circumstances or opportunity arise earlier than you expect. The caution on timing is that once you embark on the journey toward sellability, or a successful exit, you’re never really finished until the sale takes place. Sustaining the state of readiness once achieved is part of the process.
Where to Start
In order to determine your own time horizon for business exit planning, you first need to know the starting point: what your company is worth. The primary mechanism for this is a business valuation report. The valuation can range from basic to very complex, and should be performed by a trusted third party who specializes in this. It will contain information on where the business stands on all key value drivers, along with changes recommended to increase value.
Once you have the valuation in hand, you will be able to determine what it will take to get the company where it needs to be, as well as the key performance indicators to monitor so you know when you get there. One note of caution though. Nothing is black and white. The options and recommendations are inter-related, so navigation course-corrections and optimization across the business exit planning process takes skillful and nimble management.
Who can Help Owners with Business Exit Planning
That leads us to the third important component of getting started with business exit planning: who can help? You may have heard the term “fixing the plane while flying.” Let’s not forget that business owners have their hands full even before incorporating the efforts related to exit planning. Juggling short, medium and long-term priorities can feel like a heavy burden.
There are entities that can help build out strategic business exit planning, but most of them leave execution to you. It is rare, but possible, to find a more involved level of investment. That’s our niche.
We provide an alternative to selling in the near-term by investing in business owners both financially and through “sweat equity,” helping execute on the strategic and operational initiatives that improve overall business heath, sellability, transferability, and eventual successful business exit.