When Should I Start Writing my Exit Strategy?
When Should I Start Writing my Exit Strategy?
This is a question Business owners often ask too late, prolonging the time in which they are effectively ‘stuck’ in their business.
Ideally, someone pursuing a business would think about their exit strategy before embarking on the business creation. However, that is rarely the case.
The course of action then is to begin to plan for exiting at least 3 years before wanting to sell. You want to make sure your Profit and Loss Statements and Balance Sheets are consistently well organised for the 3 years prior to seeking an appraisal or valuation.
Have your accountant separate the Salary and Super of any related employees. i.e; If a Director of the Business is working in the business and taking a salary, separate this as a line item separate from the rest of the employees’ wages and super.
You want to ensure that any expenses that aren’t directly related to the running of the business are separated in the P&L so addbacks can easily be calculated and transparent to a buyer.
If you have been running several businesses through the same ABN then this is the time to separate them for accounting and taxation purposes.
It is also the time to fully systemise the business where someone can pick up the manual you create and know all policies and procedures to duplicate the business exactly how you have been running it and have proven the business successful.
As part of this systemising and writing of the policies and procedures manual the business should be put under management if the owner currently works in the business. The Managing Director can still oversee the running of the Business as an owner naturally would. However, the day-to-day running needs to be separated from an Owners duty.
A business that is fully managed can fetch a much more significant price at sale than one being reliant on the Owner’s input on a day-to-day basis. Genuine investors wish to buy genuine Businesses rather than a Job that they are required to work in on a day-to-day basis to continue profiting.
Then when you are within 6 months of wanting to sell, contact your preferred Business Broker, and have the business appraised and listed for sale. The right Buyer may come along immediately, or it may take some time to find the perfect fit for your Business, so you need to be prepared for, and ok with either scenario.
A Business Broker will take care of the Marketing of your Business to their Database and in more traditional ways such as Online, the Presentation of your Business to potential Buyers in the best light, Qualifying Buyers, Questions Back & Forth, Negotiations etc. They take the hard work and stress out of selling your Business, whilst getting you the most positive outcome.
If you would like to discuss an Exit Strategy for your Business no matter your ideal timeframe feel free to send me an email to book your complimentary 15-minute ‘Brain Picking’ session.
Tags: exit strategy selling
About the author
Jasmine Robson
Specialist Business Broker
Based on the Gold Coast, Queensland, Jasmine Robson is an extremely accomplished Entrepreneur who has built several multimillion-dollar businesses ...
