Whether you’ve been a seasoned business owner for the past 20 years, or are just at the beginning of your entrepreneurial journey, it’s never too early to start planning for the future. In fact, even if the conclusion of your business is still many years away, planning your ideal exit strategy as early as possible will allow you to implement the necessary preparations to ensure that the transition goes as smoothly as possible. When it comes to planning the perfect exit strategy for you, there are many questions to consider:
What is your end goal for your business?
If you decide to sell your company, who is the ideal purchaser?
What things should you be doing now in order to make your business as attractive and as valuable as possible for later?
Most people have countless goals when starting their exciting new business venture, but what many don’t realize is that setting goals for the end of your business is just as important! Setting your end goal early on will give you plenty of time to do the work necessary to achieve those goals and set you up for success. When deciding what your end goal will be, it’s imperative that you start asking yourself some important questions. These include:
What option is the best fit for you and your family?
Would you consider selling the business, or would you prefer to keep it in the family by transferring it to your children or another family member?
Or, perhaps, your ultimate dream is to get acquired by a Fortune 500 company?
If you do get acquired by a larger company, would you prefer to simply retire on the earnings from the sale, or be kept on as an employee?
And speaking of retirement: what is the ideal age that you want to be kicking your feet up at?
Answering these questions now will help you to set the appropriate goals for yourself and your business so that you can plan the next steps to best accomplish them.
If you decide that your end goal is to eventually sell your business—as many business owners do—then an important question to ask yourself is who you consider to be the ideal purchaser? If you decide to keep the business in the family, then it goes without saying that the ideal purchaser is either your children or a trusted family member. Or, perhaps you have an employee or business contact in mind to take over the company. Another option is to put it on the open market to the public. Regardless of what you choose, an important factor to keep in mind is whether it is important to you that your business continues to be run exactly as you would wish it to be run. If this is true for you, then planning ahead for this eventuality will allow you to train employees or groom family members to eventually take over, or even chat with business contacts about your vision for the company to ensure that everyone is on the same page. This will make all the difference when it comes time to hand over the steering wheel.
Tune in next week for Part II....
Malahat Valuation Group