Exit Planning in a nutshell
This is a guest blog from Tim Luscombe <firstname.lastname@example.org>
it is always a good idea for owners to think about an exit plan.
Most owner managers have put off thinking about exiting their business, or retiring, or what they are going to do when they are no longer working at the business they created, and feel responsible for.
That’s understandable. Most of us who start our own business did not do so with the sole aim of selling it someday. We had all kinds of motives, including a desire for freedom and the opportunity to do things our way!
However, at some point you are going to want some extra cash to fund your retirement, and with the ever increasing life expectancy and low investment returns, you are going to need more now that you might have thought, just a few years ago.
It doesn’t matter which way you exit the business, unless you plan to shut up shop and just sell the assets. Whether it is your family who take over, or your management team, or a third party, you still need to make the business as robust and successful as possible.
For most owner managers, step one is to get some distance between you and the business. If the business cannot survive without you, it is pretty unlikely anyone is going to want to give you substantial sums for it.
Acquirers buy a business (trophy assets such as football clubs excluded) for the future profits it will make for them. If the only way your business makes money is when you are involved, that is not so much a business as a job.
There are a whole range of steps that you can and should take to get your business in shape for sale; we are not just talking about being compliant with all the applicable legislation (you must do that) but structuring the business to address its weaknesses and enhance its strengths.
That process can take several years…and it is never too soon to start.