Planning Your Business Exit in 9 Steps
Preparing for Success: The Ultimate Business Exit Checklist
Are you planning to sell your business? It’s a major decision that comes with a mix of emotions, from excitement to anxiety. But with a solid plan in place, the process can become more manageable. Here are nine steps to help you plan a successful business exit.
Step One: Evaluate Your Business
Before you can start planning your exit, you need to gain a deep understanding of your business. This includes creating a comprehensive business description, setting high-level goals, and establishing your preliminary exit planning views. A one-page summary of your business can help you keep track of the most critical details.
Step Two: Assess Your Business Readiness
You need to ensure that your business is ready to be sold or transferred to new owners. Conducting a thorough business readiness assessment can help identify strengths, weaknesses, and gaps in your business. Completing a Business Attractiveness Questionnaire and Exit Readiness Questionnaire can provide you with valuable information to calculate your score, showing where your business stands. This process will help you create an action plan to close any gaps and improve your business value.
Step Three: Evaluate Your Personal Readiness
Selling a business involves not only financial but also personal considerations. It’s crucial to review your wealth management strategies, tax planning, and personal welfare to ensure that you’re ready for life after the exit. This step also involves looking at your Estate Plan to provide for your family in the event of your death or a severe accident. All of these factors are critical when planning your exit strategy.
Step Four: Determine Your Business’s Value
Knowing the value of your business is essential when planning an exit. You can conduct either a formal or informal valuation to determine how much your business is worth. A qualified professional business valuer can provide you with a formal valuation. Alternatively, you can review businesses in your industry that have sold and compare their multiple of profit (EBITDA) to determine where you sit in that range. Combining this information with your Business Attractiveness and Exit Readiness Scores can give you a good estimate of your business value. The higher your scores, the closer you are to the top end of the range, and the higher your likely business value.
Step Five: Review Your Exit Options
Once you’ve completed the assessments and have a clear understanding of your business’s value, you can start to explore your exit options. This includes considering the need to align your business, personal, and market timeframes into a one-page strategy. You should also take the time to understand the 10 basic exit options and the difference between an internal transfer and an external transfer. This will help you decide which option is best suited to your needs and goals.
Step Six: Identify Exit Plan Gaps and Recommendations
Based on the assessments and your analysis of your exit options, you can now create action plans to close any gaps that were identified. These plans should cover improvements to your business’s value, as well as business and marketing plans, exit readiness plans, estate planning, personal wealth, wellness, and ‘life after exit’ plans. Addressing these gaps will not only improve the value of your business but also help ensure a smooth and successful transition.
Step Seven: Set Educated Exit Planning Goals
As you become more educated in the exit and succession planning process, you can set clear objectives for when and how you wish to exit the business, to whom you would like to sell the business, and how much you would like the business to be worth. Your exit goals will also include your personal wealth, personal wellness, and ‘life after exit’ objectives. These goals are just as important as your business value objectives.
Step Eight: Implement Your Exit Plan
After identifying gaps and creating an action plan, you need to implement it. This step involves reviewing your resources, timing, and personnel constraints to ensure you can execute your plan. It’s crucial to monitor your progress and adjust your strategy as needed.
Step Nine: Monthly Review
Finally, it’s important to continually review and adjust your exit plan as needed. Hold yourself and your team accountable by scheduling a formal end-of-month meeting with your nominated Advisory Board or Business Advisor. Review your business performance results, business action plans, and exit action plans. Reviewing and adjusting your plan will help ensure that you stay on track and achieve your goals. It will also help you adapt to changes in the market or unforeseen circumstances that may arise during the exit process.
In conclusion, planning your business exit is a complex and time-consuming process that requires careful consideration of various factors. By following the nine steps outlined in this article, you can ensure that your exit is a success. It is important to remember that the earlier you start planning your exit, the better prepared you will be to face any challenges that arise.
At Vossmosis, we understand that every business exit is unique, and we provide tailored solutions to help entrepreneurs navigate this critical phase of their journey. Our team of experienced advisors can assist you in all aspects of your exit plan and develop a comprehensive exit strategy that aligns with your business and personal objectives. With our help, you can make informed decisions, maximize your business’s value, and achieve your exit goals with confidence.
Don’t leave your business exit to chance. Contact Vossmosis today to learn more about how we can assist you in planning and executing a successful exit strategy.
