Being a business owner has many personal and financial rewards. The payout when you’re ready for that next chapter in your life is an important one. Interestingly, 75% of business owners plan to sell their businesses within the next 10 years. But you can’t just hand the keys to the new owners and sail off into the sunset. Planning ahead and executing a well-thought-out exit strategy are crucial for achieving your goals. Here are seven essential steps to guide you through the process effectively.
1. Planning Ahead is Job 1
Successful business exits require meticulous planning, ideally beginning years before the anticipated sale. This preparation ensures that both your business and personal affairs are structured optimally for the transition and the next chapter.
2. Setting Goals
It’s important to set both financial goals for the business and your personal goals after selling the business. Defining financial objectives for the sale involves understanding your business's current value and identifying any valuation gaps between where you are and where you want to be. Most importantly, this step will set you up to initiate strategies to close those gaps.
Post-sale planning is just as important. This is your reward. Make it the most satisfying stage in your life. Studies show that 70% of business owners regret selling their businesses due to inadequate post-sale planning. Clarifying your personal aspirations assures that your wealth supports your aspirations and desired lifestyle after exiting the business.
3. Building Value
Establish a competent leadership team capable of maintaining and growing the business after your departure. Avoid making yourself indispensable; instead, focus on having the right individuals in key roles. This continuity reassures potential buyers and enhances the business's attractiveness.
4. Financial Management
Ensure your business is benefitting from robust financial management. There’s more to it than solid accounting practices. The wise choice is to engage a CFO or an individual with those proven skills. Even if you create a fractional role, having clear strategic financial oversight not only improves business operations but also enhances its appeal to potential buyers.
5. Assuring Continuity
Prepare for unexpected events with a comprehensive continuity plan. Addressing potential disruptions such as the "5 D’s" (death, disability, divorce, departure, and disagreement)* assures business stability and maintains its value during the sale process.
Infographic source: Exit Planning Institute
6. Give Yourself Options
Resist the temptation to accept the first offer that comes your way. Explore multiple options and potential buyers to maximize your financial return. This approach allows you to make a well-informed decision that aligns with your strategic goals.
7. A Winning Outcome Needs a Winning Team
Achieving a successful business sale requires expertise from various professionals. Engage with M&A brokers, legal advisors, operational consultants, and, notably, a Certified Exit Planning Advisor (CEPA). CEPAs are specially trained to assist business owners in developing and executing comprehensive exit strategies tailored to their unique circumstances. They bring a wealth of knowledge in financial planning, tax strategies, and transaction management to ensure a smooth and successful transition.
Smart business planning and hard work are how you’ve built your successful business. A successful business exit requires the same kind of planning that got you where you are today. It’s a strategic endeavor that demands foresight, meticulous planning, and the guidance of experienced professionals. Whether you're contemplating a sale in the near future or further down the road, starting early and partnering with advisors like Provista Wealth Advisors, who specialize in comprehensive exit planning, can significantly enhance your chances of achieving your desired outcome.
Make your next chapter your best chapter. For more information on how to make that happen, visit Provista Wealth Advisors to explore our specialized services or schedule a consultation with one of our Certified Exit Planning Advisors today.
Provista Wealth Advisors in Greenville, SC, provides peace of mind through personalized asset management, expert estate planning, and retirement planning. Navigate your financial journey with confidence. Rest Assured, We Have A Plan. Give us a call at (864) 696-2410 or send us a message to schedule your free introduction meeting.