Every Business Needs a
Smart Exit Strategy..
Are you a business owner?
Have you thought about how and when you’ll leave your business?
At some point, every business owner needs to address this question.
I know I did – and the company I founded went public before we sold it for mid-eight-figures in today’s dollars.
And most businesses aren’t prepared to sell anyway. It’s estimated that over 80% of businesses aren’t even saleable at the valuation levels their owners expect.
This means there’s a lot of prep work to be done before any kind of transition in ownership is even feasible.
It might help to have an experienced hand around to help with the planning and preparation for what may be the most important event in your business’ evolution – and your own wealth and liquidity.
How Will You Move On From Your Business?
Maybe you’re not ready just yet to give serious thought to how you’d like to ultimately move on form your business. That’s a mistake – because it’s never too early to plan for what’s a sure thing about your future …you’ll eventually need to move on to another phase of your life, one way or another.
And it’s best to position yourself to retain as much control over that process and outcome as possible. You do that by planning for the end point from the beginning. Since most of you are probably beyond the beginning by now, doing it as close to the beginning of your current business life as possible is the next best thing. As in now.
You’ll likely never have more options than you do now. And the more time you have to reposition your business for your optimal exit – whatever that may be for you – the more likely you’ll actually achieve that optimal outcome.
It will help get you started on the right path if you consider the likely options you’ll have available to you. I’ll assume for now that liquidating the business is not something you’d prefer, so we won’t even discuss that option that’s more likely a consequence of NOT planning your exit than planning for it.
Likewise, I’m going to assume you’re not interested in milking the business for optimum lifestyle income. If that’s your plan, an exit will be more a byproduct of this choice than something to really plan for. It’s a devil-take-the-hindmost strategy that subordinates your exit value to your current and near-term income. That’s OK if you don’t have partners or investors who might resent this choice – but it’s basically not interested in maximizing exit value, so it’s off the table for this discussion.
This leaves us with three major exit paths that warrant serious consideration. I’ve had personal experience with two of the three – and the scars to show for it.
We’ll review each briefly in articles on this site..
In the meantime, it should be obvious that the more profits you generate, the higher valuation you’ll get regardless of which exit strategy you ultimately pursue – though they each will value those profits differently…and you should understand which is which.
For this reason, it’s prudent to recover any tax refunds and/or credits your business is due, as well as any vendor overpayments that are draining your profits.
To find out just how much you’re likely to recover, click here.
For more on preparing for your eventual business exit,
see these articles on exit planning & preparation.
And to get your Free & No-Obligation
Tax Savings Estimate, click here.