Business Exit Strategies
Every business is bound to change hands sooner or later and if you wish to have it happen on your terms you need a plan to cover all circumstances, even on occasions that may be out of your control.
A business exit strategy is about leaving your business on your terms. You should operate your business so that it is ready for your exit every day of the year because you never know when circumstances will force your hand:
- Illness
- Death
- Divorce
- Partnership Breakdown
The last thing you want to happen is to be forced to sell your business in a hurry because circumstances have robbed you of your desired outcome.
An Exit Plan is one of the most important tools you should have in your business. It’s a plan that considers your future desires and ensures that you remain focused on achieving those goals whilst removing you from the business.
Some well organised business owners have an Exit Strategy as part of their business plan and make no secret about achieving this goal.
Putting strategies in place regardless of whether you have the desire to sell in the near future or at some other time in the future can significantly help to achieve your optimum sales price. This is because businesses with systems in place and are operated under management are more attractive to a broader market of potential buyers.
A good Exit Plan enables a smooth transition with less likelihood of disruption to the operation. By planning your exit well in advance you can maximise the value of your business and enable it to meet your future needs. Make sure your plan is attainable – set a realistic timetable and measurable milestones along the way and stick to them.
An Exiting Strategy or a Succession Strategy is a multi faceted process that includes an analysis of your business, a valuation of your business, the preparation of your business for sale, setting a realistic time frame and many other considerations.
What is involved in a business exit strategy?
An exit strategy is all about preparing your business for the eventual sale of your business on your terms therefore it is important to prepare it in such a manner which is attractive to a wider range of potential buyers.
It is believed that you should start planning your exit strategy from day one, it should form part of your business plan and be the underlying force which guides the processes of how you operate your business.
You need a strategy that will maximise your selling price, but please don’t worry if you haven’t formed a plan as yet. This is where we bring the greatest value to the process. Baron Consultancy can advise what buyers are looking for when they purchase a business and suggest strategies to satisfy their needs making your business a more attractive proposition.
Ways to exit your business
The following are the most likely exit strategies for an owner:
26% – Advertise the business for sale without identifying a buyer
25% – Sell or pass on to a child or another family member
19% – A trade sale to someone in the industry
17% – Close the business and sell the assets
7% – Sell to management or staff
5% – Don’t Know
* Source Small Business Survey Program April 2004 CPA Australia
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Baron Consultancy has been business consulting to small and medium size business owners and helping them achieve various key objectives since 1994. They can provide advice on such key issues as business plans, business budgets, business marketing plans, exit plans, personnel recruitment, asset management, sales and marketing and operational analysis.