Steve Gilroy says now is the best time to start planning your exit.
While most business owners spend years or decades building up their business, the majority will spend only a few months, or just weeks in some cases, preparing for the sale of their biggest asset.
In the current environment, many entrepreneurs are focused on how their world has changed and delaying decisions about selling or exiting while they wait for 'things to improve'. But if you're serious about selling your business and achieving your exit at some point in the future, there's no time like the present to be putting effort into preparing for a successful exit.
All too often, business owners are ill-prepared for a good exit, on their terms, with a conclusion that they are satisfied with. In fact, getting ready for a successful exit involves some simple steps which, if done well, will attract more potential buyers, lead to a smooth transaction and maximise the amount you will realise for your business.
Here are three key reasons why you should start planning your exit NOW.
1. Your Business Needs to Work Without You
Recognise that an acquirer will be buying the business, they are not buying you. If your business relies solely on your effort, expertise, direction and influence then it's not really a saleable business. You need to have documented processes which work, the right talent, and the reports, records and evidence to prove that it can run successfully without you. This may take some time – so get started.
A good test is to plan to take a month off work. Would the business not only survive but continue to prosper? If not, then you still have some work to do to make your business self-sufficient.
2. Make it Clean, and Make it Grow
A prospective buyer will want to see clear evidence that there is healthy and growing potential for your business. Although some buyers look for distressed businesses that can be rescued and turned around, this will push down the price accordingly.
Many businesses have issues and disputes with shareholders, suppliers, clients or key staff. Any such issues will reduce the potential for a good exit, so start to 'clean the house'. This will take time too, so begin now.
Even if it's small, consistent growth demonstrates potential and will lead to more buyer interest and a better price. Fix any sales issues and build a track record of consistent sales and profit growth.
3. Don't Go It Alone
During the lifespan of a business, owners will call on a range of experts to help them with specialist tasks, including finance, marketing and strategy. Selling a business could be the largest transaction many owners will ever make. So don't go it alone – get a specialist in and get them in early for the greatest chance of success. Advisers can help you with anything from clarifying your goals and preparing the business for sale, to showing you your options and building a plan to achieve an exit on your terms, on your timescales.
Finally, learn from others that have been there. There are many advantages to joining a peer-group of similar business owners and executives. You'll learn a great deal from engaging with others that have already taken the steps you are about to take.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
