The realities of exiting your business
Exiting a business is just as challenging as setting it up. In fact, exiting a business requires the same amount of planning, time, effort and thought processes as launching a startup. Here's a list of things you must do once you have made up your mind to exit your business to ensure that the business you are exiting can maintain its growth pattern without hiccups.
1. Do you have an exit plan at all?
Most entrepreneurs and small business owners don't have an exit plan in place. They are happy to invest their time, money and efforts into building up the business but do not think about the details of exiting or selling the business. In other Words, compare this with saying private equity investors or venture capitalists who meticulously plan ahead on how they would get their money back or get out of your business even before they have invested a penny in it.
As the entrepreneur, you have the highest stake in your business no matter how much money your investors may have put in. Hence, you must have an exit plan in because of all of the benefits.
2. Plan ahead for the 4 "D's of exiting a business.
Exit planning is essential to equip your business to handle the four 'D's of a business exit - the four 'D's being death, disability, divorce, and departure. Small business owners do not usually perceive the weight of these difficult issues of death or disability of a partner before they occur, and these issues are thus sometimes ignored at the time of buy/sell agreements. However, these issues prove to be crucial especially if the partner/person is significant to the business and his/her death or departure creates a financial strain on the business and his/her dependent family.
If the partners do not get along after some time, the business split needs to be planned for carefully so as not financially to ruin each other. Similarly, if one partner departs for greener pastures, the exit plan must take into consideration who retains the company ownership, how the income levels are to be maintained and what will be the financial payout to the departing partner.
Hence plan ahead for these issues with a fair buys/sell agreement that takes into account all the demands the small business owner typically has to face with his/her business regarding family, tax liabilities, income expectations and transfer of control of assets.
3. How to develop an exit plan that works
There are several things best left to experts. Exit planning is one such business strategy where expert intervention is required to help you develop a comfortable, profitable, stress-free and amicable exit plan. Put together a team of experts, including your current advisors, such as your attorney and financial planner and consult with them on the best exit planning possibilities available for your business.
Consult a corporate executive coaching expert who specializes in exit planning. Corporate executive coaching also maintains a strict code of confidentiality and hence as the seller, you can minimize the risk of having your Customers, suppliers or employees get an inkling that your business is up for sale.
To get some realistic, practical ideas on exit planning and on how to develop a fair buys/sell agreement, Consult with other business owners by joining a reliable CEO group or CEO association. CEO peer groups offer the best possible CEO coaching as you get proven, useful strategies from other CEOs who have been through similar experiences.
For instance, if you are business owner, you can consult a CEO group or CEO club in your locality. You will not only enjoy full confidentiality for your exit planning, but you will also get real business advice that works for people who are in the same position as you are but in industries that are not directly in competition with your business.
In summary, besides having a good exit plan, you also need to have a highly efficient financial plan in hand to help you in the process of changing over and to make the process smooth. It is vital for your future endeavors as a lot of your Financial Planning would depend on the way you have planned to exit. Whatever the reason, when ending business as an employee or an owner, ensure that you have an exit plan that works and is efficient enough to produce the result.