Are you planning an exit? If the answer is “yes,” and you are hoping to exit through a buyout, merger, or passing your company to the next generation, read on.
Your priority when planning an exit is to make the company transferable. This includes ensuring you can provide all of your company’s specialized knowledge to the new business owner.
How does one do this?
The answer is simple: set up business systems and create knowledge transfer policies now – well before your anticipated exit.
Lay the groundwork for a smooth exit
You may be planning an exit in five, ten, or even fifteen years. If this is the case, you still need to take time now to lay the groundwork for a smooth exit in the future. If you are planning an exit sooner, the actions below are even more urgent.
Follow the steps below to lay the groundwork for a smooth exit:
1. Document existing systems
The first step in creating a transferable business is to document existing processes and procedures. Vital actions to document include:
- The sales process.
- How your products are made, including all the supply chain connections that must be made.
- How a service is delivered, including any partnerships utilized during delivery.
- Customer service procedures.
- Best management practices that ensure your teams stay on track.
Begin by documenting anything essential to your company and how it works – then continue by documenting other processes utilized in each department.
2. Train others on those systems
Implement training systems for new and existing employees to ensure everyone is on the same page. This will keep your team working in sync and make it simple to train a new owner on essential processes.
3. Create knowledge transfer documentation to share your specialized knowledge
You have specialized knowledge that lives in your head – and your head alone. If you are planning to exit your company, you must document all of that specialized information so others can learn what you know and utilize it when you aren’t there to direct them.
3a. Ask vital staff to do this as well, so that company knowledge is accessible to all
Work with vital staff to create knowledge transfer documentation. While this documentation is critical to the transferability of your company, creating knowledge transfer documentation for various positions can help your existing staff in several ways, including:
- Providing them with options for uninterrupted time off.
- Making it easier for them to delegate tasks.
- Allowing them better access to internal promotions – so they aren’t stuck in a position because of their knowledge.
- Making it easier to hire an assistant for them.
4. Keep your vital business contacts in a CRM or database so they can be reached easily
You likely know where all of your business contacts are kept. Perhaps you have all of the numbers you need in your phone, or it’s all stored in Outlook. Take all those contacts and put them somewhere accessible, like in a customer relationship management system. Having vital connections in an accessible space means that you can notify these contacts of any transition in ownership – and the new owner can also connect with them easily.
5. Build an exit plan well in advance of your actual exit.
Create your exit plan now, even if you are planning to retain ownership of your company for the next decade or so. Having an exit plan will help you focus on:
a. What needs to happen for you to exit.
b. What needs to be done to prepare your business for a transition in ownership.
Some exit planning actions, like creating knowledge transfer documentation, documenting business systems, and building a culture of knowledge sharing can help your business immediately – while also making it more transferable. If you aren’t sure when you want to exit, but you’d like to take an interruption-free vacation at some point in the future, try taking the above five steps. These steps will prepare your business for any transfer – even if it’s only temporary.
Would you like to implement the plan above, but aren’t sure where to begin? Get in touch with the team here at Business Success Consulting Group. We would be happy to talk about your needs and share how we can help. Schedule a no-cost consultation today.
