I AM PLANNING TO SELL MY BUSINESS
(EXIT PLANNING)
It’s almost never too late to start planning to sell your business, and it’s almost never too early. The difference between the two is that the more advance planning time you have, the greater the options you have to increase the value of your business.
But what if getting the highest price isn’t the most important thing to you? Perhaps you value legacy and impact. Or continuity of employment for your employees. Or you want your company to continue to be a fixture of your community. Ensuring these outcomes still requires planning - the plans will simply be different.
Formulating an exit plan that achieves your objectives requires:
Know your starting point - Imagine trying to use your GPS when it doesn’t know where you are. Chances are it’s not going to produce useful routings for you, if any. It might even tell you to drive right into a lake! You must know your starting point in order to plan intelligently, or your plan will be built on a foundation of mud. For most companies, this involves commissioning a business valuation with a comprehensive analysis. The last few words are worth elaboration. While knowing the value of your business at the outset of the exit planning process is useful, knowing why the value is what it is, and understanding how to increase the value over your time horizon is perhaps ten times more so. Doing so provides a the framework for an exit plan that will actually work.
Identify your desired outcome - Once you know your starting point, that makes choosing your desired outcome (destination) much easier. You’ll gain an understanding of how ambitious or realistic that destination is, and you can plan your timing and assess your willingness and capacity to make the necessary investments in and upgrades to your company so that your desired outcome will be in reach, or if another outcome might be more realistic. Your desired outcome could even involve identifying your ideal buyers.
Create your plan - Now that you know your starting point and your destination, you can identify the route you wish to take, accounting for your time, energy level and capacity to invest in the company. The keys to ensuring that the plan is followed are specificity and simplicity. Specificity creates the accountability that produces the urgency required by stakeholders to follow through, while simplicity facilitates understanding the plan, reduces mistakes, and minimizes the risk of paralysis that often accompanies complexity.
Execute - With a plan in place, it’s time to execute, with defined tasks, responsibilities, and accountabilities. While some elements of an exit plan will yield visible results right away, others may not show observable impact for weeks or even months. Which is why execution must focus less on instant gratification, and much more on ensuring the activities that ultimately will produce results are being faithfully, competently, and consistently performed.
Assess - You need to periodically assess how the plan is progressing. Specifically, you’ll review whether milestones are being met, and if the operational and financial results you desire are being reflected in your financial reports. You will likely need and want to revisit the valuation to measure the impact of your plan and rate your overall progress. If you’re happy with the results, you will probably simply continue with your plan unless you decide to be more ambitious.
Proper exit planning can be a difference-maker on the order of millions of dollars and securing other objectives for your business. But you don’t have to do it alone. If you have a question about selling your business and the price that it should attract in a sale, contact us at High Score Strategies to set up a consultation.
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