It's never too soon to start planning your exit strategy.
Most business owners are so involved in the daily running of their business that they seldom - if ever, have timeout to plan their exit strategy. The average Australian business owner is aged in his/ her late 50's. Each year there are about 50,000 business owners looking to retire and sell their business.
More than half of all business owners will exit at a time not of their choosing - due to death, chronic illness, divorce, partnership / shareholder dispute, financial distress, or bankruptcy.
A large percentage of business owners will rely on sale of their business to fund their retirement. Most fall short - especially if the timing of their exit isn't optimum.
If your business was placed on the market today .... ask these questions.
What's your asking price?
Who's going to buy your business?
Would they pay your asking price - or would they make a lower offer?
Some thoughts to maximise your business value.
Have a clear vision of what you are trying to achieve - to paraphrase the words of Steven Covey - "begin with the end in mind" - The more vivid the vision the better the execution.
If you have partners or shareholders - document the agreement on day one - the equity contributions, the roles and the remuneration - AND - the exit strategies for each party.
3. Review the shareholders agreement annually - particularly roles, wages & profit share. Personal & business circumstances change. Be prepared.
4. Have a clearly defined strategyto achieve your objective - plusa business plan to execute the strategy and written internal operating procedures. Review them regularly.
5. Understand, document, andprotect your intellectual property including clients lists. It's the hidden value in your business.
6. Work on your business - not in it - the operation shouldn't be reliant on your continued presence and personality. What would happen if you were absent for 3 months?
7. Build a strong business culture - hire for personal values not just skill or experience - poor culture will kill strategy - every time.
8. The leadership team should be empowered to make decisions relating to their role and responsibilities and be accountable for their decisions.
9. The customers should be diverse, attracted to the brand / not the owner(s) and a high percentage long term repeat clients that have a relationship with the business.
10. Focus on the things that you can control - you can't control the economy; you can't control interest rates, or your clients - but you can control who you choose to deal with.
11. Stay close to your suppliers, treat them as you expect to be treated.
12. Keep accurate financials - measure your key results (leading indicators) and key performance indicators, don't junk up your balance sheet with non-essential items.
13. Your business must be scalable - any purchaser will be looking for "upside" - how they can extract extra growth and value out of the business.
14. Be accountable to an external party - a mentor or coach who can look at your business and give advice without emotional involvement ......