The best-case scenario for a business owner is to build your team, find a successful market and be able to turn the profit you want to. However, even after you accomplish all of these things, your business doesn’t follow you to the grave. Eventually, your business will end up in someone else’s hands — whether you’re ready to move on to another business or you choose to retire. After all the hard work you’ve put into your team, don’t you want to sell your business successfully?
A successful sale of a business doesn’t happen overnight. The more thought and planning that goes into the future transition of ownership, the more likely the company is to bring you a profit and keep running properly after you’re gone. If you haven’t thought much about what your future plans for your business look like, start now! If you are already contemplating selling your business, you should especially consider the following steps. This 4-part series will help you sell your business the right way!
The first thing to remember about selling your small business is you want to do it the right way. The right way is different for every business owner, but if you want a stable and profitable transfer of power on the business you’ve worked hard to build, you do need to consider how you’re going to make that happen.
Having a well-thought-out plan — or exit strategy — for your departure from your business is essential and can bring you several benefits. One of the main advantages is that you have control over how your business is sold. When you make a detailed plan for how you want to sell your business far before you need or want to sell it, you are more likely to avoid rushed sales and poor offers.
Unfortunately, there are more steps to forming an exit strategy than just deciding you need one. The key areas you should consider range in topic from financial to personnel.
Even if you’re just considering selling your business in the future, the first thing you should do is evaluate and organize all of your finances. The only way to move forward in your planning process is to know what your financial status, projections and expectations are. They greatly influence how you make decisions throughout the rest of the exit strategy.
Next, you need to consider all the options available to you. When it comes to exit strategy outcomes available to you, you only have a few options. Most small business sales fall into one of the three categories below.
This is such a hard principle for many business owners to accept. Your business cannot die with you — it’s going to live on in the hands of someone else. So, if it’s going to live in someone else’s hands, you should get what your business is worth when you sell.
If you have any investors or stakeholders, you’ll need to plan to speak with them about your intentions to leave the company. This is the time when you should create and inform the investors of your plan to repay them or how their investments will proceed when you sell. Never leave an outstanding financial relationship on the table — make sure all of your loose ends will be addressed and tied up.
The important roles and responsibilities that you have been performing for the company will need to be taken over by someone else when you are gone. This means that you can start training senior members of your company or new leadership to take over some of your duties when you decide to make your exit.
This may even be something that affects your timeline for selling your company. If you don’t have leaders who can take over for you, you may need to start thinking about fostering that growth ahead of time to allow you the room to leave in the future.
The same employees that you’ve counted on to grow your business and serve your clients will be affected greatly by your departure. Don’t underestimate the weight of your decision on their careers and lives. Make sure you have a plan in place to speak with your team about your decision to leave and/or sell the company. They deserve the same time and consideration to think about their place at the company as you do.
Your loyal customers will also be affected by the sale — even if the business is going to continue to run with a new owner. If you want the business you’ve built to succeed when you’re gone, don’t leave your customer base hanging. Plan to introduce the new owner to your customers. If the business is being sold, but won’t be providing services anymore, recommend another company for your customers to transfer to.
No matter where you are in your selling journey, an exit strategy is one of the most undervalued tools you can have. Your plan helps you navigate the years before and during your sale, but it also keeps you accountable for the important things you need to achieve before you can leave. If you need help creating your exit strategy, contact Todd Liles to receive expert industry advice.
Plus, an exit strategy gets you in the habit of preparing yourself and your business for the rest of the selling process. In Part 2 of the Selling Your Business The Right Way series, we explore another essential step in selling your business successfully: establishing your business’ value!
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