Are You Ready to Exit Your Business? How to Prepare for a Successful Transition !
Thinking about selling your business? You're not alone. Many business owners reach a point where they're ready to move on to the next chapter of their lives. But before you put a "for sale" sign up, there are some important things to consider.
This article will guide you through the process of preparing your business for exit and maximizing its value. We'll also explore the emotional side of selling a business, something that often gets overlooked.
Are You Sure You Want to Exit?
The first step is to ask yourself why you want to sell your business. Are you financially secure and ready for retirement? Or are you facing a personal crisis that's making it difficult to run the business? Bo Burlingham who wrote the famous books like The Great Game of Business with Jack Stack, Small Giants and of course Finish Big. Bo Burlingham said that " Many owners (who have sold their business) find themselves dealing with unanticipated regret, fighting with depression and desperately in need of a new identity and a sense of purpose. "
According to a study by PwC and EPI, a whopping 75% of business owners regret selling their business within a year of doing so. Often, this is because they haven't planned for what comes next.
How Your Reasons for Leaving Can Affect Your Business Value
- Personal Motivators: If you're selling to pursue other passions, your business is likely in good shape and will be more valuable to potential buyers.
- Personal Crisis: If you're selling due to a personal crisis, your business may be suffering. This can make it difficult to find a buyer and get a good price.
- Personally Peaked: If you feel like you've taken your business as far as you can, the value may not be impacted as much.
Preparing Yourself and Your Business for Exit
Once you've decided to sell, it's time to start preparing. Here are five key areas to focus on:
- Personal Financial Goals: Don't just focus on the highest offer you can get. Determine your "minimum number" – the lowest amount you'd be willing to accept without future regrets. Surprisingly, just thinking about this number can increase your business value.
- Personal and Social Life: Exiting your business can be a big lifestyle change. Consider how it will impact your social circle and how you'll spend your time.
- Involvement After Exit: Many buyers are willing to pay more for an owner who is willing to stay on board for a transition period.
- Employees' Well-Being: Consider how the sale of the business will affect your employees. A plan for their future can make your business more attractive to buyers.
- Owner Structure: Businesses with multiple owners tend to be more valuable than those with a single owner.
By addressing these areas, you can increase the value of your business by up to 36%.
Getting Started Today
Even if you're not planning to sell your business for years to come, it's never too early to start preparing. Here are four things you can do today:
- Consider your next chapter: What will you do after you sell your business?
- Know your minimum number: Estimate your business value using a tool like the Value Builder questionnaire.
- Imagine your exit: How do you want to be involved in the business after the sale?
- Think about your employees: How will you thank them for their contributions and ensure their future success?
By planning ahead, you can ensure a smooth and successful exit from your business.
We Can Help
At Breaking the Mould Accounting, we specialize in helping business owners prepare for exit. We can help you develop a plan to maximize the value of your business and achieve your financial goals.
Contact us today to schedule a consultation.
