Most small business owners spend so much time working in their business, they do not plan for when and how to exit their business soon enough. Whether you pass your business on to a family member or sell it to an outsider, you and your business needs to be ready. If you are an owner, waiting until your last year is never enough time, particularly if you are hoping to sell to an outside buyer and receive the maximum value for your life’s work.
To get you started, I suggest you consider these next four questions. Pick a quiet spot. Take your time. Clear your head. Relax with a beverage. Stay in the moment and write down your answers.
- What are your most important business goals or desired outcomes for a happy exit? Consider the company, your team, culture, and brand. Be as specific as possible. For example: I would like my key employees to be compensated financially for their tenure and loyalty to my company.
- What are your most important personal goals for a happy exit? Consider your finances, family-life, and any desires to continue working or pursue other meaningful activities. Be as specific as possible. For example: I would like to serve on the board of my local epilepsy foundation to support the development of new treatments.
- What key things or outcomes do you want to avoid during and after your exit? For example: I have one shot at this, so I want to avoid a deal not closing because I was not prepared.
- What are your biggest concerns about your exit currently? For example: How much money do I need to get for my company to achieve financial freedom after the sale?
Now that you have a framework around your personal and business goals, think about some of the most commonly held exit goals and desired outcomes. I have listed seven outcomes TO ACHIEVE and nine outcomes TO AVOID. Contemplate the two lists and rank each outcome on the level of importance to you: Highly desired (H), Medium importance (M), Low importance (L) or not applicable (N/A)
1. Reach personal financial freedom at exit
2. Obtain best and fair price for the company
3. Secure a cash deal / no financial strings attached
4. Leave on my own terms
5. Take care of my key people
6. Leave the company in good hands
7. Set up the company’s culture to continue
1. Running out of money post exit
2. Deal falling apart / failing to exit
3. Conflicts with partners or team
4. Paying excessive taxes
5. Feeling lost personally / do not know what to do after exit
6. Family stress or discord
7. Required to stick around for lengthy period after exit
8. Customers feeling mistreated
9. Company brand or reputation tarnished
If you have completed this exercise, then you have a start to your eventual exit plan. If you are curious as to what the next step might be, send me an email at Pat_barron@outlook.com for a free 30-minute web meeting. Using our proprietary Exit Readiness Scorecard, we will score together what it takes to be prepared for the inevitable exit – and where you stand.
Pat Barron, Arena Partner
NAVIX Certified Consultant